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QUESTION
Gay Manufacturing is expected to pay a dividend of $1.25 per share at the end of the year (D1 = $1. The stock sells for $32.50 per share, and its...
Gay Manufacturing is expected to pay a dividend of $1.25 per share at the end of the year (D1 = $1.25). The stock sells for $32.50 per share, and its required rate of return is 10.5%. The dividend is expected to grow at some constant rate, g, forever. What is the equilibrium expected growth rate?
