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5. What is the most you would pay for a stock that just paid a $2 dividend that is expected to grow 5% annually if you want a
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Ans 5) $ 21.00

P0 = Price of Share
D1 = Current Dividend
Ke = Cost of Equity
g = growth rate
P0 = D1 / (Ke - g)
P0 = 2.10 / (15%- 5%)
P0 = 21.00
D1 = D0* (1 + g)
D1 = 2* (1 + 5.00%)
D1 = 2.1000

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