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Homework answers / question archive / A common share just paid a dividend of D0 = $1
A common share just paid a dividend of D0 = $1.90. The required rate of return is rs = 6.0%, and the constant growth rate is g = 4.0%. What is the current share price?
A.108.68
B.31.67
C.98.80
D.95.00
Share price = Next Dividend/ (Required rate of return - Growth rate)
Share price =1.9*(1+4%)/(6%-4%)
= 98.80
