What will be the new value of p0

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Friedman Steel Company will pay a dividend of $5.20 per share in the next 12 months (D1). The required rate of return (Ke) is 14 percent and the constant growth rate is 7 percent. (Each question is independent of the others. Round the final answers to 2 decimal places.)

a. Compute P0.

Price of common share $

b. Assume Ke, the required rate of return, goes up to 20 percent, what will be the new value of P0?

New price of common share $

c. Assume the growth rate (g) goes up to 10 percent, what will be the new value of P0?

New price of common share $

d. Assume D1 is $6.10, what will be the new value of P0?

New price of common share $

Reference no: EM132558406

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