Determine the value of the stock

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Reference no: EM13257624

The Lo Company earned $ 2.60 per share and paid a dividend of $ 1.30 per share in the year just ended. Earnings and dividends per share are expected to grow at a rate of 5 percent per year in the future. Determine the value of the stock:

a. if the required rate of return is 12 percent.

b. if the required rate of return is 15 percent.

c. Given your answers to ( a) and ( b), how are stock prices affected by changes in investor's required rates of return?

Reference no: EM13257624

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