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

    Solution Summary

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