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What price would you assign to the stock

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Reference no: EM132312542

Your first task in your new job at an investment bank is to price a new stock issue. You expect the stock will pay a dividend of $2 per share starting 1 year after issue and that dividends will grow at 3.0% per year thereafter. The return on similar stocks is 5.5%.

a. What price would you assign to the stock?

b. How much do you expect the price of the stock will increase during the first year?

Reference no: EM132312542

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