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This equation is based on the following information : The Gilbert Corporation will increase its dividends by 15% for the next three years. Thereafter, g
This equation is based on the following information :
The Gilbert Corporation will increase its dividends by 15% for the next three years. Thereafter, g will settle into its long-run growth rate of 5%. If the required rate of return on the stock is 8% and the company just paid a dividend of $2, what is the current stock price? (please answer only part B of the question)
B. Assuming that you are correct about the Gilbert Company's dividend payout, what do you expect next period's stock price to be? What will be your one period total rate of return from holding the stock between t=0 and t=1? Show how you derived your answers. Again, assuming you are correct about the firm's dividend payouts and nothing else changes, do you expect to earn this is rate of return forever? Explain why or why not. (2 points) You can only use cons 30 > growthStep by Step Solution
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