If investors expect to earn an annual rate of return of 12


Constant growth rate, Infinite Horizon (with growth rate given)

Let’s say that the Peak Growth Company just paid its shareholders an annual dividend of $2.00 and has announced that the dividends would grow at an annual rate of 8% forever

If investors expect to earn an annual rate of return of 12% on this investment, how much would they offer to buy the stock for?

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Financial Management: If investors expect to earn an annual rate of return of 12
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