Current price of stock using the dividend growth model

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Reference no: EM13910846

For Stock x, the cash dividend paid most recently is $5 [D0]. The dividends are expected to grow at a constant rate of 6% per year for ever. The required rate of return on the common stock is 13%. Then

(a) Calculate the current price of the stock using the dividend growth model.

(b) You find out from the Internet that the stock is currently selling for $70. State whether the stock is underpriced, overpriced or correctly priced by the market

Reference no: EM13910846

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