D acudier attempt Question 14 1 pts Reddick Enterprises' stock currently sells for $50.00 per share....

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D acudier attempt Question 14 1 pts Reddick Enterprises stock currently sells for $50.00 per share. The dividend is projecte

business accounting

Answer 1

Answer #1

Answer : 58.71

Given P₀ = $ 50

Required return = 9 %

Constant growth = 5.5%

D₁ = P₀ * ( Rs - g) = 50 ( 9 -5.5 ) % = 1.75.

Required P₃

P₃ = D₄ / ( R_s - g).

D₄ = 2.055

P3 = 2.055 / ( 9 - 5.5 ) % = 58.71

Expected price three year from now = $ 58.71

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Answer 2

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