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Business, 26.11.2019 23:31 angelesramos112

On a certain date, kastbro has a stock price of $37.50, pays a dividend of $0.64, and has anequity cost of capital of 8%. an investor expects the dividend rate to increase by 6% per year inperpetuity. he then sells all stocks that he owns in kastbro. given kastbroʹs share price, was thisa reasonable action? a) no, since the constant dividend growth rate gives a stock estimate of $37.50.b) no, since the constant dividend growth rate gives a stock estimate greater than $37.50.c) yes, since the constant dividend growth rate gives a stock estimate greater than $37.50.d) no, since the difference between his calculated stock price and the actual stock price mostlikely indicates that his estimate of dividend growth rate was incorrect.

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On a certain date, kastbro has a stock price of $37.50, pays a dividend of $0.64, and has anequity c...
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