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Unformatted text preview: nonconstant growth of 20% for 2 years followed by a constant rate of 5% thereafter. The firms required return is 10%. What is the firms intrinsic value today, P ? 4) Fee Founders has perpetual preferred stock outstanding that sells for $60 a share and pays a dividend of $5 at the end of each year. What is the required rate of return? 5) Investors require a 15% rate of return on Levine Companys stock (that is, r s = 15%). What is its value if the previous dividend was Do = $2 and the investors expect dividends to grow at a constant annual rate of (1) 5%, (2) 0%, (3) 5% or (4) 10%?...
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This note was uploaded on 01/11/2011 for the course BUS 320 taught by Professor Sloan during the Winter '08 term at N.C. State.
 Winter '08
 sloan
 Management

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