Computer stocks currently provide expected rate of return

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Reference no: EM13889520

a) Computer stocks currently provide an expected rate of return of 14%. MBI, a large computer company, will pay a year-end dividend of $1 per share. If the stock is selling at $20 per share, what must be the market's expectation of the growth rate of MBI dividends?

b) If dividend growth forecasts for MBI are revised downward to 4% per year, what will be the price of the MBI stock?

Reference no: EM13889520

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