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the answer is 185 but can you give me an explanation on how to calculate 9. Dividend Policy A company announces a change of dividend
the answer is 185 but can you give me an explanation on how to calculate
9. Dividend Policy A company announces a change of dividend policy after paying a dividend equal to 6 per share. The company decides to retain part of the dividends for next year in order to invest in a project which will create a higher dividend growth. Its dividend next year will thus be equal to 2 per share and it will grow at a rate of 5% in subsequent years. Just before the announcement the stock of the company had a price equal to 150 and its previous dividend growth rate was equal to 2%. What is the price of the stock after the if the cost of equity remains unchanged? (Round your answer to the announcement nearest integer) O a) 150 O b) 200 O c) 185 O d) 194 O e) It cannot be computed with the available information O f) None of the other answers is correctStep by Step Solution
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