aa Aa 10. Nonconstant growth stock Portman Industries just paid a dividend of $2.88 per...
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aa Aa 10. Nonconstant growth stock Portman Industries just paid a dividend of $2.88 per share. The company expects the coming year to be very profitable, and its dividend is expected to grow by 20.00% over the next year. After the next year, though, Portman's dividend is expected to grow at a constant rate of 4.00% per year. The risk-free rate (r) is 5.00%, the market risk premium (RPM) is 6.00%, and Portman's beta is 2.00. Term Value Dividends one year from now (Di) Horizon value (P:) Intrinsic value of Portman's stock Assuming that the market is in equilibrium, use the information just given to complete the table. $33.05 $23.63 $26.58 $31.90 Portman has 900,000 shares outstanding, and Judy Davis, an investor, holds 13,500 shares at the current price as just found. Suppose Portman is considening issuing 112,500 new shares at a price of $22.59 per share. If the new shares are sold to outside investors, by how much will Judy's investment in Portman be diluted on a per-share basis? O $0.44 per share O s0.92 per share O $0.37 per share $0.54 per share Thus, Judy's investment will be diluted, and Judy will experience a total of
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