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Price of a Share of Common Stock

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Question: A share of common stock has just paid a dividend of $2.00. If the expected long-run growth rate for this stock is 15 percent, and if investors require a 19 percent rate of return, what is the price of the stock?

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Solution Summary

The price of a share of common stock is calculated using the dividend discount model in this solution. An Excel file with the solution is also attached and provides the solution in a more structured format.

Solution Preview

Please view the attached file. By clicking directly on the cells, you can see the measures which were taken in order to derive ...

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