Solved: What must be the discount rate-constant-growth model, Microeconomics

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What must be the discount rate-constant-growth model

Problem:

Constant-Growth Model. A stock sells for $40. The next dividend will be $4 per share. If the rate of return earned on reinvested funds is 15 percent and the company reinvests 40 percent of earnings in the firm, what must be the discount rate?

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Microeconomics: What must be the discount rate-constant-growth model

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Microeconomics: What must be the discount rate-constant-growth model

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