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Common stock value for Dennis and Dennis Research Inc

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The common stock of Denis and Denis Research, Inc., trades for $60 per share. Investors expect the company to pay a $3.90 dividend next year, and they expect that dividend to grow at a constant rate
forever. If investors require a 10% return on this stock, what is the dividend growth rate that they are anticipating?

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Solution Preview

Current trade price of Common stock: $60 per share
Expected dividend next year: $3.90 per share
Required Return on stock: 10%
The below formula is used to ...

Solution Summary

This tutorial provides guidelines on how to solve common stock value problem when there is constant growth in the dividend.