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Posted by: Homeworkhelp
Price Quoted by Student: $2.5
Posted On: 2011-03-19 08:08:26

Assume ABC is expected to pay a total cash dividend of $7.50 next year and its dividends are expected to grow at a rate of 5% per year forever. Assuming annual dividend payments, what is the current market value of a share of ABC stock if the required return on ABC common stock is 9%?

Return on common stock r = (D1/ P0) + g Current
Price $2.5
Attachment 1: Assume ABC is expected.xls
Solution Posted By: Homeworkhelp    Posted on: 19-03-2011