### Stock using the dividend growth model

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##### Reference no: EM131419703

Candy Corp will pay a \$2.40 dividend in the next 12 months.  The required rate of return for this stock is 18% and the company has been enjoying a constant rate of growth of 5%.

Compute the current value of this stock using the dividend growth model. Now assume that the dividend is increased to \$2.70 and the required return increase to 20%. What is the value now?

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