Youve collected the following information from your favorite financial Web site. 52-Week Price Stock (Div)...
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Youve collected the following information from your favorite financial Web site. 52-Week Price Stock (Div) Div Yld % PE Ratio Close Price Net Chg Hi Lo 77.40 10.43 Palm Coal 0.36 2.6 6 13.90 0.24 55.81 33.42 Lake Lead Grp 1.54 3.8 10 40.43 0.01 131.02 69.95 SIR 2.45 2.8 10 89.06 3.07 50.24 13.95 DR Dime 0.80 5.2 6 15.43 0.26 35.00 20.74 Candy Galore 0.32 1.5 28 ?? 0.18 According to your research, the growth rate in dividends for SIR for the next five years is expected to be 20.0 percent. Suppose SIR meets this growth rate in dividends for the next five years and then the dividend growth rate falls to 5.25 percent indefinitely. Assume investors require an 15 percent return on SIR stock. Requirement 1: According to the dividend growth model, what should the stock price be today?
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