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Solution to "Stock valuation" question

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How much are you willing to pay for one share of Delphia stock if the company just paid a $1.34 annual dividend, the dividends increase by 2.8% annually, and you require a 14% rate of return?

a) $9.84
b) $11.96
c) $12.30
d) $12.99
e) $13.61

Please explain!!!

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The price would be the present value of all dividends. Since the ...

Solution Summary

The solution explains how to determine the current price of a stock.