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Drop in value of a share of summit systems

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Reference no: EM132418884

Problem: Summit Systems has an equity cost of capital of 11.0%?, will pay a dividend of ?$1.75 in one? year, and its dividends had been expected to grow by 5.5% per year. You read in the paper that Summit Systems has revised its growth prospects and now expects its dividends to grow at a rate of 3.0% per year forever.

Required:

Question 1: What is the drop in value of a share of Summit Systems stock based on this? information?

Question 2: If you tried to sell your Summit Systems stock after reading this? news, what price would you be likely to? get? Why?

Question 3: What is the drop in value of a share of Summit Systems stock based on this? information?

Reference no: EM132418884

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