Constant Growth Model and Discount Model
Question # 00672560
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Updated on: 04/13/2018 10:50 AM Due on: 04/13/2018
Constant Growth Model and Discount Model
. Constant-Growth Model. A stock sells for $40. The next dividend will be $4 per share. If the rate of return earned on reinvested funds is 15 percent and the company reinvests 40 percent of earnings in the firm, what must be the discount rate?
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Solution: Constant Growth Model and Discount Model