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We are considering investing in a company that has just paid a dividend of $0.10 per share. Looking back in time we determined dividends grew
We are considering investing in a company that has just paid a dividend of $0.10 per share. Looking back in time we determined dividends grew at a rate of 10% per year. The required rate of return on this companys shares is 10%. Using the dividend growth model, what will be the share price in one years time? In your answer be sure to present the formula and assign all variables Discuss limitations of the dividend growth model.
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