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    Stock price

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    A share of common stock just paid a dividend of $1.00. If the expected long-run growth rate for this stock is 5.4% and if investors required rate of return is 11.4%, what is the stock price?

    a) $16.70
    b) $17.13
    c) $16.28
    d) $18.01
    e) $17.57

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    Solution Preview

    The stock price is the present value of all dividends. Since the dividends grow at a constant rate, we can ...

    Solution Summary

    The solution explains how to determine the stock price