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QUESTION 14 An investor is analyzing a stock using the constant growth dividend discount model. The equity currently trades at $10 and is expected to...

QUESTION 14
  1. An investor is analyzing a stock using the constant growth dividend discount model. The equity currently trades at $10 and is expected to pay a dividend of $2. The investors required rate of return is 8%. Compute the implied growth rate:
  2. A. 2%
  3. B. 4%  
  4. C. 6%
  5. D. 8% 

4.00000 points  

QUESTION 15
  1. The same investor in the prior question is again reviewing a stock using the constant growth dividend discount model. The equity currently trades at $100 and pays a dividend of $30. The perpetual growth rate is assumed to be 5%. Compute the investors cost of equity:
  2. A. 2%

  3. B. 4%
  4. C. 6%

  5. D. 8%

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