Should the stock price currently be perceived

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Reference no: EM131972972

Question: A family-member is interested in buying the stock of a company that currently trades at $80/share. Use and explain the model if the stock's current annual dividend yield is 2.50%/year, an expected dividend growth rate of 5%/year, and a cost of equity capital of 10%/year. Based on these figures, should the stock price currently be perceived to be over or under-valued?

Reference no: EM131972972

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