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The Empower Company has a required rate of return, r, of 8.5 % and its current price, Po, is $60.00 per share. The dividend is

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The Empower Company has a required rate of return, r, of 8.5 % and its current price, Po, is $60.00 per share. The dividend is expected to grow at a constant rate of 5.0 % per year. The current dividend Do, is $2.00 per share. Using the constant growth model, determine the expected year-end dividend at the end of year 4, D O$2.00 $243 O$2.72 $2.10 Working with the information provided in the above problem, now assume the dividend is expected to grow at a constant rate of 14.0 % rather than 5.0%. Determine the stock's current price In this situation, the price is equal to the current dividend of $2.00. The constant growth model cannot be used because the growth rate is greater than the required rate of return. $60.00 $0.00

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