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    Calculate market value of a stock

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    (Dividend discount model)

    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

    Solution describes the steps to calculate market value of a stock with constant dividend growth.