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-   -   Price of stock (https://www.askmehelpdesk.com/showthread.php?t=34513)

  • Sep 18, 2006, 04:33 PM
    sagrin
    Price of stock
    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?
  • May 21, 2007, 09:39 PM
    bunnyKutty
    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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