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How much should you be willing to pay for the stock

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Question - Ridgemont Can Company's last dividend was $1.55. You plan to purchase the stock today because you feel that the growth rate will be 8 percent for the next three years and the stock will reach $22.50 per share by the end of the three years. How much should you be willing to pay for the stock if you feel that a 5 percent growth rate can be maintained indefinitely and you require a 15 percent retum Base your decision on the DDM.

Reference no: EM133072695

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