Question
Warwic Company just paid a dividend of $4.00. You expect the dividend to grow by 3% this year, 4% next year and 6% the
Warwic Company just paid a dividend of $4.00. You expect the dividend to grow by 3% this year, 4% next year and 6% the following year. You have determined the required rate of return on this stock should be 15%. The stock's current market price is $62. What would the terminal growth rate in years four and beyond need to be to justify this price?
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Financial Management Theory and Practice
Authors: Eugene F. Brigham, Michael C. Ehrhardt
15th edition
130563229X, 978-1305632301, 1305632303, 978-0357685877, 978-1305886902, 1305886909, 978-1305632295
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