Problem 2. Air Canada Corporations common stock has a current market value or price of...
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Finance
Problem 2.
Air Canada Corporations common stock has a current market value or price of $40 and it is known that the company will pay a dividend of $8.00 per common stock next year. The firm plans to increase this dividend amount at an average rate of 5% per year in the following years indefinitely.
Required:
- What would be the expected return on Air Canadas common stock? (10 Points)
- What are the specific components of the expected return? What are they called? Please name and explain them.(10 Points)
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