Assume the stock is priced in equilibrium

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1. Given the following data, what is the stock's expected growth rate according to the Gordon model?

Dividend per share just paid: $2

Current market price: $40

Required rate of return: .10

Assume the stock is priced in equilibrium.

a. 5.65%

b. 6.94%

c. 3.32%

d. 4.76%

e. 2.01%

2. Based on the following information on DDF common stock, what is the expected price today?

Last dividend per share: $5

Growth rate: 20% per year for years 1 through 2; 10% per year for years 3 to infinity

Required rate of return for the stock: 20%

a. $62

b. $59

c. $71

d. $68

e. $65

Reference no: EM131974989

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