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The general Cereal common stock dividends have been growing at annual rate of 7% per year over the past 10-years. Current dividend (D0) is $1.70 per share. Determine the current value of a share of this stock to the investor who needs a 12% rate of return if the given conditions exist:

a) Dividends are predicted to continue growing at the historic rate for foreseeable future.

b) The dividend growth rate is expected to rise to 9% per year.

c) The dividend growth rate is expected to reduce to 6.5% per year.

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  • Category:- Basic Finance
  • Reference No.:- M910226

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