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Unformatted text preview: value of stock A: 100 Here it is assumed that the first dividend is received in one year from now Value of stock B = dividend declaed next year/ r - g Value of stock B: 83.33 Value of stock C is the present value of the dividends for the next 5 years assuming dividends g Value of stock C: 27.25 Stock A is the most valuable At Market capitalization of 7% value of stock A: 142.86 value of stock B: 166.67 Value of stock C: 29.77 Stock B is the most valuable end. That's why the growth rate is half the ROE. row at 20%)...
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This note was uploaded on 07/06/2011 for the course MM 305 taught by Professor Fulton during the Fall '09 term at Kaplan University.
- Fall '09