What would the new equilibrium value of the stock be

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D company's current dividend (D0) is $4 per share. The growth rate in dividends over the next three years is forecasted at 12%. After that, Rove's growth rate is expected to equal the industry average of 5%. If the required return is 18%, what is the current value of the stock? Suppose D Company's management takes actions that reduce the firm’s risk, and its required return falls to 15%. What would the new equilibrium value of the stock be?

Reference no: EM131603379

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