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The stock of Nogro Corporation is currently selling for $25 per share. Earnings per share in the coming year are expected to be $3.50. The
The stock of Nogro Corporation is currently selling for $25 per share. Earnings per share in the coming year are expected to be $3.50. The company has a policy of paying out 60% of its earnings each year in dividends. The rest is retained and invested in projects that earn a 17% rate of return per year. This situation is expected to continue indefinitely. |
a. | Assuming the current market price of the stock reflects its intrinsic value as computed using the constant-growth DDM, what rate of return do Nogro |
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