What would the CAT stock value be if the constant growth rate were 5% instead of 4%? (The current dividend and the required rate of return are the same as in the previous example, $4.50 and 9.72%, respectively.) $______ (Hint: the growth rate, g, affects both the numerator and the denominator.) The value of the Caterpillar stock (with a $4.50 last-year dividend and a 4% growth rate, as in Example 1) three years from now is expected to be $_____, to the nearest penny. (Hint: to find the value of a constant growth stock expected n years from now, we need a dividend expected one year ahead, in year n+1.)

What would the CAT stock value be if the constant growth rate were 5% instead of 4%? (The current dividend and the required rate of return are the same as in the previous example, $4.50 and 9.72%, respectively.) $__ (Hint: the growth rate, g, affects both the numerator and the denominator.) The value of the Caterpillar stock (with a $4.50 last-year dividend and a 4% growth rate, as in Example 1) three years from now is expected to be $_, to the nearest penny. (Hint: to find the value of a constant growth stock expected n years from now, we need a dividend expected one year ahead, in year n+1.)

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Description: What would the CAT stock value be if the constant growth rate were 5% instead of 4%? (The current dividend and the required rate of return are the same as in the previous example, $4.50 and 9.72%, respectively.) $______ (Hint: the growth rate, g, aff

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter7: Corporate Valuation And Stock Valuation

Section: Chapter Questions

Problem 14MC

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