Martin Office Supplies paid a $3 dividend last year. The dividend is expected to grow...
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Accounting
Martin Office Supplies paid a $3 dividend last year. The dividend is expected to grow at a constant rate of 7 percent over the next four years. The required rate of return is 14 percent (this will also serve as the discount rate in this problem). Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.
e. Compute the current value of the stock. Note: Do not round intermediate calculations. Round your final answer to 2 decimal places. f. Use the formula given below to show that it will provide approximately the same answer as part e. Note: Do not round intermediate calculations. Round your final answer to 2 decimal places. P=D1/Keg g. If current EPS were equal to $5.32 and the P/E ratio is 1.1 times higher than the industry average of 8 , what would the stock price be? Note: Do not round intermediate calculations. Round your final answer to 2 decimal places. h. By what dollar amount is the stock price in part g different from the stock price in part f ? Note: Do not round intermediate calculations. Round your final answer to 2 decimal places. With regard to the stock price in part f, indicate which direction it would move if
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