Use the Equation P₀ = (K * EPS₁) /r-G)to Demonstrate

question 26

Essay

Use the equation P₀ = (K * EPS₁) /r-g)to demonstrate the relationship between the price-earnings model and the constant growth dividend model.P₀ = the current price per share of stock,K = the dividend payout ratio,is the forward looking earnings per share,r is the required rate of return for common stock,and g is the anticipated constant rate of growth.

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Definitions:

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