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The firm has a constant growth rate (g) of 9 percent. Compute the current price of the stock (P0).

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BioScience, Inc., will pay a common stock dividend of $3.20 at the end of the year (D1). The required return on common stock (Ke) is 14 percent. The firm has a constant growth rate (g) of 9 percent. Compute the current price of the
stock (P0).

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Solution Summary

Solution is given by using the formula and computing it by hand (no excel or financial calculator).

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