Solved: Common stock valuation and the required rate of return, Finance Basics

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Common stock valuation and the required rate of return

Question:

Mary Lee, with Invest Inc. of Oklahoma City, is trying to sell you a stock with a current market price of $25.00. The stocks last dividend (D) was $2.00, and earnings and dividends are expected to grow at a constant rate of 10%. If your required rate of return is 20%, should you buy or not buy this stock? Why?

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Finance Basics: Common stock valuation and the required rate of return

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Finance Basics: Common stock valuation and the required rate of return

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