Mature manufacturing firm

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1. Antiques R Us is a mature manufacturing firm. The company just paid a dividend of $11.40, but management expects to reduce the payout by 5 percent per year indefinitely. If you require a return of 14 percent on this stock, what will you pay for a share today?

2. Navel County Choppers Inc. is experiencing rapid growth. The company expects dividends to grow at 21 percent per year for the next 12 years before leveling off at 5 percent into perpetuity. The required return on the company’s stock is 12 percent. If the dividend per share just paid was $1.62, what is the stock price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Reference no: EM131859824

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