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What is the share price under the growth

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Reference no: EM132920579

A company pays a $ 5 dividend per year , and the board of directors has no plans to change the dividend . The company's investors expect a 20 per cent return on their investment .

Problem 1: What should be the price of the company's share ?

Problem 2: Assume now the company dividend policy sets dividend growth at a 4 per cent annual rate , what is the share price under this growth?

Problem 3: Compare the two prices that you fond above in 1 and 2 , which one is higher and why?

Reference no: EM132920579

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