Dorpac Corporation has a dividend yield of 1.7%. Its equity cost of capital is 7.7%, and its dividends are expected to grow at a constant rate.a. What is the expected growth rate of Dorpac's dividends?b. What is the expected growth rate of Dorpac's share price?

Dividend's Constant Growth Model states that dividend is receivable perpetually and there is…

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Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter8: Basic Stock Valuation

Section: Chapter Questions

Problem 2P

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Dorpac Corporation has a dividend yield of 1.9%. Its equity cost of capital is 7.1%, and its dividends are expected to grow at a canstant rate. a. What i the expected growth rate of Dorpac's dividends? b. What is the expected growth rate of Dorpac’s share price? a. What s the expected growth rate of Dorpac's dividends? The growth rate wil be [ [%. (Round to one decimal place.) b. What is the expected growth rate of Dorpac’s share price? What is the expected growth rate of Dorpac’s share price? (Select the best choice below) O A. With constant dividend growth, the share price is expected to grow at rate g =5.2% O B. With constant dividend growth, the share price is expected to grow at rate g=7.1% O C. With constant dividend growth, the share price is expected to grow at rate g =5.2% ~1.9% = 3.3%. O D. With constant dividend growth, the share price is expected to grow at rate g =1.9%
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What is the expected growth rate of Dorpac's dividends? . What is the expected growth rate of Dorpac's share price?