(Answered) Question investors currently require a market

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Question: Investors currently require a market capitalization rate of 14 percent on the shares of Dime Corporation, whose dividend payments for this year are expected to be 36¢. The current market price per share is $8.50.

(a) What is the implied long-term average growth rate of dividends?

(b) If annual growth expectations for Dime increase to 12 percent, at what price should the shares trade?

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