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    Fletchv's Avatar
    Fletchv Posts: 2, Reputation: 1
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    #1

    Feb 7, 2009, 08:03 PM
    Corporate Finance
    A stock sells for $40. The next dividend will be $4 per share. If the rate of return earned on reinvested funds is 15% and the company reinvests 40% of the earnings in the firm, what must be the discount rate?
    Fletchv's Avatar
    Fletchv Posts: 2, Reputation: 1
    New Member
     
    #2

    Feb 7, 2009, 08:04 PM
    A stock sells for $40. The next dividend will be $4 per share. If the rate of return earned on reinvested funds is 15% and the company reinvests 40% of the earnings in the firm, what must be the discount rate?
    Clough's Avatar
    Clough Posts: 26,677, Reputation: 1649
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    #3

    Feb 7, 2009, 10:23 PM

    Hi, Fletchv!

    We do help people with homework on this site. But, the keyword here is "help". We don't directly answer homework questions for students here. If we did, how would that be helping them to learn how to come up with the answers themselves?

    If you use this site to get help with your homework, please do take some time to come up with and post what you think might be the answers yourself. If you do that, it's likely that you'll have someone very knowledgeable about whatever subject who'll be willing to discuss with you how and why your answers are correct or incorrect.

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    Thanks!

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