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You intend to purchase Marigo Ltd's ordinary shares at $50 per share, hold them for one year, and sell after a dividend of $6 is paid.

1. You intend to purchase Marigo Ltd's ordinary shares at $50 per share, hold them for one year, and sell after a dividend of $6 is paid. How much will the share price have to appreciate if you required rate of return is 15%?

2.

Wayne, Inc.’s outstanding common stock is currently selling in the market for $33. Dividends of $2.30 per share were paid last year, and the company expects annual growth of 5 percent.

a. What is the value of the stock to you, given a 15 percent required rate of return?

b. Determine the expected rate of return for the stock.

3. Should you purchase this stock?

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