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Constant-growth model

Constant-Growth Model. Here are data on two stocks, both of which have discount rates of 15 percent:

Return on equity Stock A Stock B
15% 10%

Earnings per share $2.00 $1.50

Dividends per share $1.00 $1.00

a. What are the dividend payout ratios for each firm?

b. What are the expected dividend growth rates for each firm?

c. What is the proper stock price for each firm?

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Solution Preview :

Prepared by a verified Expert

Finance Basics: Constant-growth model

Reference No:- TGS01451950

Have a Question? (oR Write a Review)

Recent Questions Asked Finance Basics

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Solution Preview :

Prepared by a verified Expert

Finance Basics: Constant-growth model

Reference No:- TGS01451950

Recent Questions Asked Finance Basics

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Q : Terry corporation price-earnings ratio

Q : Need for external financing

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