What stock worth if require sixteen percent rate of return

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Reference no: EM132788129

Problem 1: Lowell Growth Inc. is a high growth company and expects to use all its earnings in the next five years to fund its growth. At the end of the sixth year, the company will pay a dividend of $4.50 and these dividends will grow at a constant rate of 5% per year thereafter. What is the stock worth if you require 16% rate of return?

A. $47.48

B. $42.95

C. $19.48

D. $23.98

E. $29.48

F. $38.47

Reference no: EM132788129

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