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What is the value of a share of summit systems stock

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Reference no: EM132915127

You read in the paper that Summit Systems will pay a dividend of $1.50 this year. At that point you expected? Summit's dividend to grow by 6.0% per year. Today you read in the paper that Summit Systems has revised its growth prospects and expects its dividends to grow at a rate of 3.0% per year forever. The? firm's equity cost of capital is 11.0%.

Problem a. What is the value of a share of Summit Systems stock based on the original expected dividend growth of 6.0% per? year?

Problem b. If you tried to sell your Summit Systems stock after reading this? news, what price would you be likely to get? Why?

Reference no: EM132915127

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