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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
The FI Corporation’s dividends per share are expected to grow indefinitely by 5% per year.
If this year’s year-end dividend is $8 and the market capitalization rate is 10% per
year, what must the current stock price be according to the DDM?

If the expected earnings per share are $12, what is the implied value of the ROE on future investment opportunities?
How much is the market paying per share for growth opportunities (that is, for an ROE on future investments that exceeds the market capitalization rate)?
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