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What is the current value of a share of classic common stock

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Reference no: EM132523457

Question 1: Classic Warehouse currently pays a common stock dividend of $0.60 per share. Dividends are expected to grow at a rate of 10 percent per year for the next four years and then to continue growing at a rate of 7 percent per year indefinitely. What is the current value of a share of Classic's common stock to an investor who requires a 14 percent rate of return?Show workings.

Question 2: If the market price of the share is $8, is the share over-priced, under-priced or fairly-priced.Explain your answer.

Reference no: EM132523457

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