An expected long-run constant dividend growth rate

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A share of common stock has an expected long-run constant dividend growth rate of 9%, and the expected dividend to be paid at the end of the year is $4.50. The required rate on the common stock is 18%. If the common stock is selling for $50/share then according to the dividend growth model, the stock is: overpriced, underpriced or correctly priced? Which one is it?

Reference no: EM131529871

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