Changes in Growth and Stock Valuation
Consider a firm that had been priced using a 12 percent growth rate and a 14 percent required return. The firm recently paid a $1.35 dividend. The firm just announced that because of a new joint venture, it will likely grow at a 12.5 percent rate.
How much should the stock price change (in dollars and percentage)? (Round your answers to 2 decimal places.)
Change in stock price $
Change in stock percent %