Constant-growth model-what price should the stock sell

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Reference no: EM13885167

Constant-Growth Model. Gentleman Gym just paid its annual dividend of $3 per share, and it is widely expected that the dividend will increase by 5% per year indefinitely.

a. what price should the stock sell at? The discount rate is 15%.

b. How would your answer change if the discount rate were only 12%? Why does the answer change?

Reference no: EM13885167

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