Consider a firm that had been priced using a 6 percent growth rate and a 9 percent required rate. The firm recently paid a $0.50 dividend. The firm has just announced that because of a new joint venture, it will likely grow at an 8 percent rate. How much should the stock price change in dollars? A) $13.33 B) $56.33 OC) $23.33 OD) $36.33.

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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Question 16
Consider a firm that had been priced using a 6 percent growth rate and a 9 percent
required rate. The firm recently paid a $0.50 dividend. The firm has just announced
that because of a new joint venture, it will likely grow at an 8 percent rate. How
much should the stock price change in dollars?
A) $13.33
B) $56.33
C) $23.33
D) $36.33
D
Transcribed Image Text:Question 16 Consider a firm that had been priced using a 6 percent growth rate and a 9 percent required rate. The firm recently paid a $0.50 dividend. The firm has just announced that because of a new joint venture, it will likely grow at an 8 percent rate. How much should the stock price change in dollars? A) $13.33 B) $56.33 C) $23.33 D) $36.33 D
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