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    Dividend paid

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    A share of common stock has an expected long-run constant growth rate of 10 percent and is currently priced at $66 per share. If investors require a 15 percent rate of return, then what was the last dividend paid on the stock?

    Po = Dn (1 +Gc)
    __________
    Ke - Gc

    $66 = D1 (1 + .10)
    _____________
    15% - 10%

    $66 = D1 (1 + .10)
    _____
    $5

    $3.30 = D1 (1.10)

    $3.00 = Do = last dividend paid was $3.00 answer ?????
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    What was the last dividend paid on the stock

    A share of common stock has an expected long-run constant growth rate of 10 percent and is currently priced at $66 per share. If investors require a 15 percent rate of return, then what was the last dividend paid on the stock?

    Po = Dn (1 ...

    Solution Summary

    Solution shows computation of the last dividend paid on the stock.

    $2.19