Determine the change in stock price assuming

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A firm is earning $2 per share and pays out $0.80 in dividends. The required return is 16%, and the projected growth rate in dividends is 9%. Because of government actions, inflation increases from 5% to 7%. Determine the change in stock price assuming (a) no ability to adjust for the increased inflation, and (b) a 75% adjustment to the change in inflation.

Reference no: EM131450582

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