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Constant Growth Valuation Boehm Incorporated is expected to pay a $2.10 per share dividend at the...

Constant Growth Valuation

Boehm Incorporated is expected to pay a $2.10 per share dividend at the end of this year (i.e., D1 = $2.10). The dividend is expected to grow at a constant rate of 7% a year. The required rate of return on the stock, rs, is 14%. What is the estimated value per share of Boehm's stock? Round your answer to the nearest cent.

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Answer #1

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

=2.1/(0.14-0.07)

which is equal to

=$30

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