Ume that the average firm in your companyrsquos industry is, Ask an Expert

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Ume that the average firm in your company’s industry is expected to grow at a constant rate of 6% and that its dividend yield is 7%. Your company is about as risky as the average firm in the industry and just paid a dividend (D0) of $1. You expect that the growth rate of dividends will be 50% during the first year (g0,1=50%) and 25% during the second year (g1,2=25%). After Year 2, dividend growth will be constant at 6%. What is required rate of return on your company’s stock? What is the estimated value per share of your firm’s stock?

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Financial Management, Finance

Category:- Financial Management
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