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    Dividend discount model

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    Assume RHM is expected to pay a total cash dividend of $5.60
    next year and its dividends are expected to grow at a rate of 6% per year forever. Assuming annual dividend payments, what is the current market value of a share of RHM stock if the required return on RHM common stock is 10%?

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    Solution Summary

    The solution explains how to calculate the current price of stock using the dividend discount model