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The current market price for the ABC Company is $20.00 per share. the ABC Company is considered to be a constant growth company that is
The current market price for the "ABC" Company is $20.00 per share. the "ABC" Company is considered to be a constant growth company that is growing at an annual rate of 6%. Based on the value of the most recent dividends, the "ABC" Company expected the next dividend to be approximately $2.00. "ABC" Company has a beta coefficient of 1.2, and the required rate of return on the market is 15%. As "ABC" Company financial manager, you have access to insider information concerning a switch in product lines which would not change the growth rate but would cut "ABC" Company beta coefficient in half. question If you buy the stock at the current market price, what is your expected percentage gain if you purchased the stock and the company implemented its plan regarding the new product line? (write the answer in a decimal format, do not use the percentage sign)
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