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Equation of the constant growth model

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Reference no: EM131090105

A share of common stock has just paid a dividend of $5 (i.e., D0 = $5) that is expected to grow by 4% each year. If investors require a 12 percent of return, then what is the current stock price? Since the question is a typical constant growth model, an easy way of solving the problem is to use the equation of the constant growth model.

Reference no: EM131090105

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