What is the current price of XYZ's common stock?
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The last dividend paid by XYZ Company was $1.00. XYZs growth rate is expected to be a constant 5%. XYZ's required rate of return on equity (ks) is 10%. What is the current price of XYZ's common stock?
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Solution Summary
This solution shows how to apply Gordon's growth model with formula, calculations and the answer.
Solution Preview
Applying Gordon's growth model,
Ks = {[do (1 + g)] / Pe} + g
Pe = [do (1 ...
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