Question: A share of common stock has an expected long-run constant growth rate of 10 percent and is currently priced at $66 per share. If investors require a 15 percent rate of return, then what was the last dividend paid on the stock?
Po = Dn (1 +Gc)
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Ke - Gc
$66 = D1 (1 + .10)
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15% - 10%
$66 = D1 (1 + .10)
_____
$5
$3.30 = D1 (1.10)
$3.00 = Do = last dividend paid was $3.00 answer ?????
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