Loose Leaf for Foundations of Financial Management Format: Loose-leaf
Loose Leaf for Foundations of Financial Management Format: Loose-leaf
17th Edition
ISBN: 9781260464924
Author: BLOCK
Publisher: Mcgraw Hill Publishers
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Chapter 10, Problem 33P

A firm pays a $1 .50 dividend at the end of year one ( D 1 ) , has a stock price of $155  ( P 0 ) , and a constant growth rate (g) of 10 percent.

a. Compute the required rate of return ( K e ) . Indicate whether each of the following changes would make the required rate of return ( K e ) go up or down. (Each question is separate from the others. That is, assume only one variable changes at a time.) No actual numbers are necessary.

b. The dividend payment increases.

c. The expected growth rate increases.

d. The stock price increases.

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Loose Leaf for Foundations of Financial Management Format: Loose-leaf

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