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Problem 9-3 Constant growth valuation Harrison Clothiers stock currently sells for $34 a share. It just paid a dividend of $

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Answer #1

Expected price=$34*(1+Growth rate)

=$34*1.07

=$36.38

Required rate=(D1/Current price)+Growth rate

=[(2.5*1.07)/34]+0.07

=14.87%(Approx).

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