The last dividends paid out to firm ABCs stockholders were $5 per share. The current...
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The last dividends paid out to firm ABCs stockholders were $5 per share. The current market value of the stock is $100. The dividends are expected to grow at a rate of 10% for the next 2 years followed by a constant growth rate of 6%. The required rate of return on the firms stock is 12%. A) Would you purchase the stock? B) Calculate the expected rate of return assuming a constant rate of dividends growth of 8%.
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