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Stock valuation

Microsoft Inc. paid $2 dividend last week. You expect the dividend to grow steadily at a rate of 5 percent per year. If the discount rate for the stock is 12 percent, at what price will the stock sell?

Solution Preview

Use the dividend discount model
Price = D1/(Ke-g)
D1 is the ...

Solution Summary

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