Changes in Growth and Stock Valuation Consider a Firm That

question 19

Multiple Choice

Changes in Growth and Stock Valuation Consider a firm that had been priced using a 6 percent growth rate and a 9 percent required rate. The firm recently paid a $0.50 dividend. The firm has just announced that because of a new joint venture, it will likely grow at an 8 percent rate. How much should the stock price change (in dollars and percentage) ?

• A) $33.33, 67%
• B) $33.33, 198%
• C) $36.33, 67%
• D) $36.33, 206%

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