Calculate the current value of a share of the stock


Question: General Cereal common stock dividends have been growing at a yearly rate of 7% per year over the past ten (10) years. Current dividend (Do) is $1.70 per share. Calculate the current value of a share of this stock to an investor who requires a 12% rate of return if the following conditions exist?

[A] Dividends are expected to continue growing at the historic rate for the foreseeable future.

[B] The dividend growth rate is expected to increase to 9% per year.

[C] The dividend growth rate is expected to decrease 6.5% per year.

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Finance Basics: Calculate the current value of a share of the stock
Reference No:- TGS020923

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