Question
ABC common stock just paid a dividend of $9.75 per share. Dividends are paid annually. Two different analysts are valuing ABC's stock. The analyst
ABC common stock just paid a dividend of $9.75 per share. Dividends are paid annually. Two different analysts are valuing ABC's stock. The analyst working for New Bank believes that the required rate of return on the stock is 17.1%. The analyst working for Old Bank believes that the required rate of return on stock is 15.7%. In addition, the analyst working for New Bank believes that the dividends will grow by 9.5% per year. The analyst working for Old Bank believes that the dividends will grow by 9.8% per year. What will be the amount of the difference in their value estimates for ABC's common stock?
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Corporate Finance
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
10th edition
978-0077511388, 78034779, 9780077511340, 77511387, 9780078034770, 77511344, 978-0077861759
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