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1. John is evaluating a stock that he believes will pay a dividend equal to $1.85 in exactly one year from today. Further, John expects that in addition to the dividend he will be able to sell the stock for the amount $49 per share also one year from today. Using this information, what is the stock's price today if the required rate of return on the stock is 13.00%?

2. John is looking to value a particular stock that is expected to pay the dividend of $1.80 at the end of each year for at least the next few years. John expects to to be able to sell the stock at the end of year two, just after he receives the dividend in that year, for $71 per share. Given this information, what is the estimate of the stock's price today if the required rate of return is 16.00%.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92781630

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