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Stock Valuation The opportunity cost of capital is 10 percent. Which stock has a greater value? Show work to receive credit. Stock A is expected
Stock Valuation
- The opportunity cost of capital is 10 percent. Which stock has a greater value? Show work to receive credit.
- Stock A is expected to provide a cash dividend of $10 a share forever.
- Stock B is expected to pay a cash dividend of $5 per share next year. Thereafter, dividend growth is expected to be 4 percent a year forever.
- Stock D belongs to Potato Corp. For the coming year, Potato is expected to report earnings per share of $5 and pay out a cash dividend per share of $2. Assume that Potato will be able to maintain its current dividend payout ratio and continue to earn a 15% rate of return on equity for the foreseeable future. The applicable opportunity cost is 10%
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