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Use the historical dividend data below to calculate the constant growth rate, estimate the price of O'Brien Ltds’ common stock knowing that the investor has an 19% required rate of return. 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 $0.41 $0.48 $0.56 $0.65 $0.75 $0.88 $0.99 $1.10 $1.13 $1.39   Question 10Answer a. g= 17.50% and Price (P0) = $56.43 b. g= 14.04% and Price (P0) = $31.49 c. g= 27.4% and Price (P0) = $300.81 d. g= 14.53% and Price (P0) = $35.60

Use the historical dividend data below to calculate the constant growth rate, estimate the price of O'Brien Ltds’ common stock knowing that the investor has an 19% required rate of return. 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 $0.41 $0.48 $0.56 $0.65 $0.75 $0.88 $0.99 $1.10 $1.13 $1.39   Question 10Answer a. g= 17.50% and Price (P0) = $56.43 b. g= 14.04% and Price (P0) = $31.49 c. g= 27.4% and Price (P0) = $300.81 d. g= 14.53% and Price (P0) = $35.60

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter7: Common Stock: Characteristics, Valuation, And Issuance
Section: Chapter Questions
Problem 2P
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Use the historical dividend data below to calculate the constant growth rate, estimate the price of O'Brien Ltds’ common stock knowing that the investor has an 19% required rate of return.

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
$0.41 $0.48 $0.56 $0.65 $0.75 $0.88 $0.99 $1.10 $1.13 $1.39

 

Question 10Answer

a.

g= 17.50% and Price (P0) = $56.43

b.

g= 14.04% and Price (P0) = $31.49

c.

g= 27.4% and Price (P0) = $300.81

d.

g= 14.53% and Price (P0) = $35.60

 

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