What would you calculate the price to pay for a stock with 13% required rate of return, 4% rate of dividend growth, and an annual dividend of $2.50 which will be paid tomorrow?
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What would you calculate the price to pay for a stock with 13% required rate of return, 4% rate of dividend growth, and an annual dividend of $2.50 which will be paid tomorrow?
Cost of equity Ke = D1/P0 + g
13% = 2.5/P0 + 4%
P0 = 2.5/(13% - 4%)
Price of equity = $27.78
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