Ecology labs inc will pay a dividend of 340 per share in, Ask an Expert

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Ecology Labs, Inc., will pay a dividend of $3.40 per share in the next 12 months (D1). The required rate of return (Ke) is 14 percent and the constant growth rate is 10 percent. (Each question is independent of the others.) a. Compute the price of Ecology Labs' common stock. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Price $ b. Assume Ke, the required rate of return, goes up to 18 percent. what will be the new price? (Do not round intermediate calculations. Round your answer to 2 decimal places.) New price $ c. Assume the growth rate (g) goes up to 13 percent. what will be the new price? Ke goes back to its original value of 14 percent. (Do not round intermediate calculations. Round your answer to 2 decimal places.) New price $ d. Assume D1 is $4.00. what will be the new price? Assume Ke is at its original value of 14 percent and g goes back to its original value of 10 percent. (Do not round intermediate calculations. Round your answer to 2 decimal places.) New price $ Hints Referencese Book & Resources Worksheet Difficulty: Challenge

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Financial Management, Finance

Category:- Financial Management
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