Determine the value of the stock using gordon growth model

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The Lo Company earned $2.60 per share and paid a dividend of $1.50 per share in the year just ended. Earnings and dividends per share are expected to grow at a rate of 6% per year in the future.

Problem 1: Determine the value of the stock (using the Gordon growth model of valuation):

If the required rate of return is 12%

If the required rate of return is 15%

Problem 2: How are the stock prices different as calculated in parts (i) and (ii) above?

Reference no: EM132684034

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