##### Common Stock of California Corporation will pay a dividend of \$8.00 in the

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upcoming year, and dividends are expected to grow 5% per year in the future. Your  required rate of annual  return is 12%. Using the Constant  Dividend  Growth Model  calculate the current price of the Common Stock.

Mar 25th, 2015

Common Stock of California Corporation will pay a dividend of \$8.00 in the

upcoming year, and dividends are expected to grow 5% per year in the future. Your  required rate of annual  return is 12%. Using the Constant  Dividend  Growth Model  calculate the current price of the Common Stock.

P0 = D1/(R -g)  = D0* (1+ g)/(R- g)

\$8*1.05/(.12- .05)

\$8.4/.07

\$120

Mar 25th, 2015

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Mar 25th, 2015
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Mar 25th, 2015
Dec 8th, 2016
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