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Common stock value - Constant growth

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Use the constant-growth model (gordon model) to find the value of each firm shown in the following table.

Firm Dividend expected next year dividend growth rate required return

A $1.20 8% 13%

B 4.00 5 15

C 0.65 10 14

D 6.00 8 9

E 2.25 8 20

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The solution explains how to calculate the value of a firm using the gordon growth formula

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The constant growth model gives the price of the stock as the present value of all ...

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