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Stock Valuation Magellen Corporation stock currently sells for $56 per share. The market requires an 12...

Stock Valuation
Magellen Corporation stock currently sells for $56 per share. The market requires an 12 percent return on the firm s stock. If the company maintains a constant 4 percent growth rate in dividends, what was the most recent dividend per share paid on the stock?
DPS: $ ____________.

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Answer #1

Stock price = Latest dividend * (1* 0.04)/(.12 – 0.04)

56 = Latest dividend * 1.04/ 0.08

4.48 = Latest dividend * 1.04

Latest dividend = 4.48/1.04

                              = $4.31

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