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Stacker Weight Loss currently pays an annual​ year-end dividend of ​$2.00 per share. It plans to...

Stacker Weight Loss currently pays an annual​ year-end dividend of

​$2.00

per share. It plans to increase this dividend by

4.5 %

next year and maintain it at the new level for the foreseeable future. If the required return on this​ firm's stock is

14 %

what is the value of​Stacker's stock?

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Answer #1

Current price=D1/(Required return-Growth rate)

=(2*1.045)/(0.14-0.045)

which is equal to

=$22

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