If the firms risk increases causing the required return to, Finance Basics

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If the firms risk increases causing the required return to

Scott Manufacturing is a firm in the machine-tool-component industry. The firm's most recentcommon-stock dividend was $2.40 per share. Due to its stable sales and earnings, the firmsmanagement feels that the dividends will remain at the current level for the foreseeable future.

a.) If the required return is 12%, what is the value of the common stock?

b.) If the firm's risk increases, causing the required return to rise to 20%, what will be the common stocks value?

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Finance Basics: If the firms risk increases causing the required return to

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Finance Basics: If the firms risk increases causing the required return to

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