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    Detailed Explanation To Current Stock Price

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    The Zumwalt Company is expected to pay a dividend of $2.25 per share at the end of the year, and that dividend is expected to grow at a constant rate of 5.00% per year in the future. The company's beta is 1.15, the market risk premium is 5.50%, and the risk-free rate is 4.00%. What is the current stock price?
    a. $42.25
    b. $43.31
    c. $44.39
    d. $45.50
    e. $46.64

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    Solution Preview

    The current stock price is the present value of all dividends. Since the dividends grow at a constant ...

    Solution Summary

    The solution explains how to calculate the current stock price using the dividend discount model.