Company R has paid most recent dividend as $2.55. The dividend will be paid by thecompany forever and the dividend will grow at 6.00% forever. The required rate of returnis 10%. What will be the current stock price?a. $63.750b. $67.575c. $65.125d. $67.255

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What will be the current stock price?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter8: Basic Stock Valuation

Section: Chapter Questions

Problem 2P

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Concept explainers

Portfolio Management

Portfolio management is the process by which an investor decides that how the person will invest in a variety of assets in order to get a desired return in the future. A portfolio means a pool of assets that includes securities, bonds, and other investment instruments which helps in risk minimization of the money that has been invested. In other words, it can be said that a portfolio means a combination of assets in which an investor decides to invest their money in order to get a lump sum return in the future or even a series of cash flow that the person is expecting at the end of their job life.

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Company R has paid most recent dividend as $2.55. The dividend will be paid by the
company forever and the dividend will grow at 6.00% forever. The required rate of return
is 10%. What will be the current stock price?
a. $63.750
b. $67.575
c. $65.125
d. $67.255

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