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Investors anticipate that Sweetwater Manufacturing Inc.'s next dividend, due in one year, will be $4 per share.

Investors anticipate that Sweetwater Manufacturing Inc.'s next dividend, due in one year, will be $4 per share. Investors also expect earnings to grow at 5 percent in perpetuity, and they require a return of 10 percent on their shares. Use the Gordon growth model to calculate Sweetwater's stock price today.

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514797_BUSS.doc

As per Gordon’s growth model:
Stock value (P) = D/(K-G)
Where ,
P = stock value
D = expected dividend per share one year from now
K = required rate of return for equity investor
G = growth rate...

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