Question
Use the following information to answer questions 11 and 12. P.C. Jenny Company (PCJ) and MartWall Company (MWC) are in the same risk class.PCJ dividends
Use the following information to answer questions 11 and 12.
P.C. Jenny Company (PCJ) and MartWall Company (MWC) are in the same risk class.PCJ dividends have remained unchanged at $3.00 per year, and are not expected to change in the future. MWC dividends have had a constant growth rate of 4 percent per year and are expected to maintain this growth rate in the future. The market price of the PCJ stock is $26/share. MWC just paid a dividend of $2.00 per share.
What is the market required rate of return on the PCJ stock?
What should be the market price of MWC shares?
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Advanced Financial Accounting
Authors: Richard Lewis, David Pendrill
7th Edition
0273658492, 978-0273658498
