Compute the current value of the stock

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Maxwell Corp paid a $8 dividend last year. The dividend is expected to grow at a constant rate of 8 percent over the next four years. The required rate of return is 14 percent (this will also serve as the discount rate in this problem). Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.

A. Compute the current value of the stock.

B. If current EPS were equal to $8.00 and the P/E ratio is 1.51 times higher than the industry average of 12, what would the stock price be?

Reference no: EM131871376

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