15. Alliance stock just paid a dividend of $1.50 a share (i.e. $D_0$ = $1.50). The dividend is expected to grow at a constant rate of 4.00% a year. Alliance stock currently trades for $24.00 a share. What is the expected stock price 1 year from now? What is the required rate of return? (3 points)
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Since the dividend is expected to grow at a constant rate of 4.00% a year, we can calculate it as follows: D1 = D0 * (1 + g) D1 = $1.50 * (1 + 0.04) D1 = $1.50 * 1.04 D1 = $1.56 Show more…
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