the dividend growth model may be use to value a stock v=Do(1+g)                                                                                                k-g a. what is the value of a stock if: Do=$2 k==10% g=6% b. what is the value of this stock if the dividend is increased to $3 and the other variables remain constant? c. what is the value os this stock if the required return decline to 7.5 percent and the other variables remain constant? d. what is the value of this stock if the growth rate declines to 4 percent and the other variables remin constant? e. what is the value of this stock if the dividend is increased to $2.30, the growth rate declines to 4 percent, and the required return remains 10 percent?

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter2: Risk And Return: Part I
Section: Chapter Questions
Problem 8P
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the dividend growth model may be use to value a stock v=Do(1+g)

                                                                                               k-g

a. what is the value of a stock if:

Do=$2

k==10%

g=6%

b. what is the value of this stock if the dividend is increased to $3 and the other variables remain constant?

c. what is the value os this stock if the required return decline to 7.5 percent and the other variables remain constant?

d. what is the value of this stock if the growth rate declines to 4 percent and the other variables remin constant?

e. what is the value of this stock if the dividend is increased to $2.30, the growth rate declines to 4 percent, and the required return remains 10 percent?

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