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Current price of OC’s stock is $19.50 with an expected dividend of $2.34 and an expected yield of 16%.
Value of the stock when the dividends are growing at a constant rate is
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Check out a sample textbook solution- XYZ Company announced today that it will begin paying annual dividends next year. The first dividend will be $0.1 a share. The following dividends will be $0.2, $0.3, and $0.4 a share annually for the following 3 years, respectively. After that, dividends are projected to increase by 3 percent per year. How much are you willing to pay to buy one share of this stock today if your desired rate of return is 10%?arrow_forwardMiller Brothers Hardware is expected to an annual dividend of $1.15 per share next year. Today, the company announced that future dividends will be increasing by 2.6 percent annually. If you require a 12 percent rate of return, how much are you willing to pay to purchase one share of this stock today?arrow_forwardFive Star Corporation will pay a dividend of $4.15 per share next year. The company pledges to increase its dividend by 6.25 percent per year, indefinitely. If you require a return of 9 percent on your investment, how much will you pay for the company’s stock today?arrow_forward
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- EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT