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problem1: Ackert Company's last dividend was 1.55 dollars. The dividend growth rate is expected to be constant at 1.5 dollars for two years, after which dividends are expected to grow at a rate of 8.0% forever. The firm's required return [rs] is 12.0 percent. Determine the current stock price?

[A] $39.30

[B] $40.48

[C] $41.70

[D] $37.05

[E] $38.16

problem2: Huang Company's last dividend was 1.25 dollars. The dividend growth rate is expected to be constant at 15 percent for three years, after which dividends are expected to grow at a rate of 6 percent forever. If the firm's required return [rs] is 11 percent, find out its current stock price?

[A] $32.49

[B] $33.50

[C] $34.50

[D] $30.57

[E] $31.52

Basic Finance, Finance

  • Category:- Basic Finance
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