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    Stock Analysis

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    Company x's stock currently sells for $20.00 a share. It just paid a dividend of $1.00 a share. The dividend is expected to grow at a constant rate of 6% a year. What stock price is expected 1 year from now? What is the required rate of return?

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    Solution Preview

    Given, P0 = $20
    g= 6%
    D0 = $1

    D1 = D0 (1 + g)
    = 1 (1 + 0.06)
    = ...

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