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The Lo Company earned $ 2.60 per share and paid a dividend of $ 1.30 per share in the year

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The Lo Company earned $ 2.60 per share and paid a dividend of $ 1.30 per share in the year just ended. Earnings and dividends per share are expected to grow at a rate of 5 percent per year in the future. Determine the value of the stock;a. if the required rate of return is 12 percent.;b. if the required rate of return is 15 percent.;c. Given your answers to (a) and (b), how are stock prices affected by changes in investor?s required rates of return?

 

Paper#25092 | Written in 18-Jul-2015

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