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Problem

A stock analyst assumes that a stock will not pay its first dividend until 12 years from today.

The dividend per share (DPS) at that time is assumed to be $6/share, and the DPS is assumed to stay $6/share forever.

The analyst finds a value of the stock today, P₀ = $21.03.

What value of the required return does the analyst assume?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M92821088

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