Determining the Price of Stock
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Ziggs Corporation will pay a $3.85 per share dividend next year. The company pledges to increase its dividend by 4.75 percent per year, indefinitely. Considering this, answer the following:
If you require a 12 percent return on your investment, how much will you pay for the company's stock today?
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Solution Summary
This solution illustrates how the Constant Growth Model can be used to calculate the company's stock value. All calculations, formulas and variables are described in 70 words.
Solution Preview
We use the the Dividend Discount (Constant Growth) Model to value the company's stock today.
Dividend Discount (Constant Growth) ...
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