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QUESTION
The XYZ Corporation pays a dividend of $1 for each share and its required rate of return is 8%. Answer the following questions: Assuming zero growth
The XYZ Corporation pays a dividend of $1 for each share and its required rate of return is 8%.
Answer the following questions:
Assuming zero growth in dividends, what is the value of each share?
Now assume a 4% annual growth rate in the dividend paid. What is the value of each share?
Assume the growth rate is still 4%, but the required rate of return drops to 6%. What is the new
value of each share?
