Consider a firm that had been priced using a 12 percent growth rate and a 14 percent required return. The firm recently paid a $1.55 dividend. The firm just announced that because of a new joint venture, it will likely grow at a 12.5 percent rate. How much should the stock price change (in dollars and percentage)? (Round your answers to 2 decimal places.) Change in stock price Change in stock percent $ 12.92 %

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Consider a firm that had been priced using a 12 percent growth rate and a 14 percent
required return. The firm recently paid a $1.55 dividend. The firm just announced that
because of a new joint venture, it will likely grow at a 12.5 percent rate.
How much should the stock price change (in dollars and percentage)? (Round your
answers to 2 decimal places.)
Change in stock price
Change in stock
percent
LA
12.92
%
Transcribed Image Text:Consider a firm that had been priced using a 12 percent growth rate and a 14 percent required return. The firm recently paid a $1.55 dividend. The firm just announced that because of a new joint venture, it will likely grow at a 12.5 percent rate. How much should the stock price change (in dollars and percentage)? (Round your answers to 2 decimal places.) Change in stock price Change in stock percent LA 12.92 %
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