Scott Manufacturing is a firm in the machine - tool - component industry. The firm's most recent common - stock dividend was $2. 4 0 per sha re. Due to its stable sales and earnings, the firm ’ s management predicts dividends will remain at the current level for the foreseeable future.
If the required return is 7%, what is the value of the common stock?
If the firm's risk increases, causing the required return to rise to10%, what will be the common stocks value?