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What is the firm expected or required rate on equity

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Reference no: EM132513235

Silicon Wafer company currently pays a dividend `of $1 per share and a share price of $20.

Question a) If this dividend was expected to grow at a 12 percent forever, what is the firm expected or required rate on equity using a dividend discount model approach?

Question b) Instead of situation in part (a), suppose that the dividend was expected to grow at a 20 percent rate for five years and at 10 percent per year thereafter. Now what is the firm expected or required return on equity.

Reference no: EM132513235

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