Homework Answers
Dividend (D0) = $1.25
Growth rate (g) = 7%
Required return (Rs) = 12 %
Price (P) = D0 * (1 + g) / (Rs - g)
P = $1.25 * (1.07) / (0.12 - 0.07)
P = $26.75
Pay no more than $26.75
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Liquified Foods Inc. has declared its next three dividends will be $0.80, $0.95, and $1.12. The stock price should be $50.00 per share at the time of the third dividend. If an investor wants 9% return on his money, what is he willing to pay for a share of Liquified Foods Inc. now? He will pay $61.09 or less He will pay $41.01 or less He will pay $57.82 or less He will...
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Please solve clearly and explain all steps
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