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10 March, 04:22

Boots Roofing just paid its annual dividend of $0.90 a share. The firm recently announced that all future dividends will be increased by 3.5 percent annually. Today, what is one share of this stock worth to you if you require a 12 percent annual rate of return?

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  1. 10 March, 06:05
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    Price of share = $10.96

    Explanation:

    next year dividends would be. 9 * (!+0.035) = 0.9315

    Price of share = div1 / (r-g)

    = 0.9315 / (.12-0.035)

    = $10.96
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