Solved Question: Problem-Solving for stocks: Use the constant dividend growth model

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Question:

Problem-Solving for stocks: Use the constant dividend growth model to calculate the intrinsic value of each of the following stocks:

(a) Stock B pays a current dividend of $4.00 per share per year, with a constant dividend growth rate of 3%, and has a required return of 12%.

(b) Stock C pays a current dividend of $3.50 per share per year, with a constant dividend growth rate of 4%, and has a required rate of return of 10%.

(c) Stock D pays a current dividend of $2.00 per share per year, with a constant dividend growth rate of 5%, and has a required rate of return of 14%.

Answer:

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