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The remaining $300,000 for the building purchase will be financed by equity investment. The board of directors has agreed to issue additional shares to raise
The remaining $300,000 for the building purchase will be financed by equity investment. The board of directors has agreed to issue additional shares to raise this money. Given the previous liabilities, no dividends are expected for the next 5 years. Starting in year 6, the board plans to issue dividends of $1 a year growing at 10% annually. If the required rate of return for this business is 15% annually, what is the stock price today? How many shares must be issued at this stock price to raise the $300,000?
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