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22 June, 16:50

You are considering purchasing stock in Canyon Echo. You feel the company will increase its dividend at 4.7 percent indefinitely. The company just paid a dividend of $3.38 and you feel that the required return on the stock is 10.9 percent. What is the price per share of the company's stock?

a.$54.22

b.$57.08

c.$51.37

d.$31.01

e.$54.52

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Answers (1)
  1. 22 June, 19:37
    0
    b.$57.08

    Explanation:

    Current price=D1 / (Required return-Growth rate)

    = (3.38*1.047) / (0.109-0.047)

    which is equal to

    =$57.08.
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