The constant growth model, Finance Basics

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You have the following information for Stardusts: Current EPS is $1.79.  The current dividend is $.68 per share.  The return on equity is 24%.  The present price is $49.22.

a.    Use the dividend discount model (also called as the constant growth model) to evaluate the return for Starbucks.
b.    Suppose your answer to part a. is correct, evaluate the present value of the growth opportunities (PVGO).


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