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Thomas Brothers- Share Price

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Thomas Brothers is expected to pay a $0.50 per share dividend at the end of the year (i.e., D1=$0.50). The dividend is expected to grow at a constant rate of 7 percent a year. The required rate of return on the stock, rs, is 15 percent. What is the value per share of the company's stock?

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Solution Summary

The share price is calculated using Dividend Discount Model.

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Po= Div1/ (r-g)
where Po is the share price
Div1 = ...

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