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Company A has projected net income per share for this year at $2.80 per share. It has traditionally paid out a dividend of 55% of its net income. Income and dividends have been growing at a rate of 7% per year. The equity discount rate for comparable companies is 14%.

a. What is the projected dividend for next year?

b. What is the current value of the stock using the Dividend Discount Model?

Basic Finance, Finance

  • Category:- Basic Finance
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