Malfoy corporation paid a 300 dividend per share this, Ask an Expert

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Malfoy Corporation paid a $3.00 dividend per share this year. Its total earnings per share were $6.00. Malfoy's book equity is $60 million. There are 1 million shares outstanding and the discount rate for Malfoy stock is 12%.

(a) What is the growth rate (g) of Malfoy?

(b) What is the price of a share of Malfoy stock if you assume that the numbers above are representative of the foreseeable future?

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