Homework Answers
Price If growth exists = D1/(rs-g)
= 6/(.15-.06)
= 6/.09
= $ 66.67 per share
Price if no growth exist :in such case all of the earnings are distributed as dividend
Price =D/rs
= 6/.15
= $ 60
PVGO = Price If growth exists - Price if no growth exist
= 66.67 -60
= $ 6.67
Correct option is "A"
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