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Task1. Suppose a dividend of $1.25 was paid. The stock has a required rate of return of 11.2% and investors anticipate the dividend to grow at a stable rate of 10%. Complete parts (a) through (e) below.

a) Evaluate D0, D1, D2, D3 and D7.

b) Evaluate the present value of the dividends for t = 3 years.

c) Evaluate the current market price.

d) Suppose that the stable growth rate is actually 0%. What is current market price?

describe the behaviour of the present value of each future dividend (that is, the behaviour as t raises to maturity of 10%.

Financial Accounting, Accounting

  • Category:- Financial Accounting
  • Reference No.:- M94143

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