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Harrison Corporation is interested in acquiring Van Buren Corporation. Assume that the risk-free rate of interest is 5%, and the market risk premium is 6%. 21-1 VALUATION Van Buren currently expects to pay a year-end dividend of $2.00 a share (D 1 = 2.00). Van Buren’s dividend is expected to grow at a constant rate of 5% a year, and its beta is 0.9. What is the current price of Van Buren's stock?

BuyFind

Fundamentals of Financial Manageme...

14th Edition
Eugene F. Brigham + 1 other
Publisher: Cengage Learning
ISBN: 9781285867977
BuyFind

Fundamentals of Financial Manageme...

14th Edition
Eugene F. Brigham + 1 other
Publisher: Cengage Learning
ISBN: 9781285867977

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Chapter
Section
Chapter 21, Problem 1P
Textbook Problem

Harrison Corporation is interested in acquiring Van Buren Corporation. Assume that the risk-free rate of interest is 5%, and the market risk premium is 6%.

21-1 VALUATION Van Buren currently expects to pay a year-end dividend of $2.00 a share (D1 = 2.00). Van Buren’s dividend is expected to grow at a constant rate of 5% a year, and its beta is 0.9. What is the current price of Van Buren's stock?

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