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What stock worth if require sixteen percent rate of return

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Reference no: EM132736474

Problem 1: Lowell Growth Inc. is a high growth company and expects to use all its earnings in the next five years to fund its growth. At the end of the sixth year, the company will pay a dividend of $4.50 and these dividends will grow at a constant rate of 5% per year thereafter. What is the stock worth if you require 16% rate of return?

A.$19.48
B.$29.48
C.$47.48
D.$38.47
E.$23.98
F.$42.95

Reference no: EM132736474

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