a.
Adequate information:
Current dividend per period (D0) = $3.80
Growth rate of dividend (g) = 4.5%
Required
To determine: Current price of the stock
Introduction: The dividend growth model computes the stock price with the help of the growth rate, required rate, and dividend for the next period.
b.
Adequate information:
Frequency of payments in a year = 4
Current dividend per period (D0) = $3.80
Growth rate of dividend (g) = 4.5%
Required rate of return (R) = 11%
To determine: Current price of the stock. Also, determine whether this model of stock valuation is appropriate or not.
Introduction: The dividend growth model computes the stock price with the help of the growth rate, required rate, and dividend for the next period.
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