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What is the current stock price given the dividend and required rate of return?

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A stock is expected to pay a dividend of $0.75 at the end of the year. The required rate of return is rs= 12.5% and the expected constant growth rate is g= 8.5%. What is the current stock price?

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Solution Summary

This solution demonstrates how to determine the fair market of a share of common stock using the dividend growth model.

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We can obtain the price by using the Dividend Growth Model. Under this model, ...

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