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A company announces it will pay constant annual dividends of $5.00. You calculate the price of the stock as $62.50 based on these dividends. You expect the required rate of return and dividends will remain the same in the future.

What do you expect the price of the stock will be 10 years from now?

A. $65.00
B. $60.00
C. $67.50
D. $62.50
E. $60.63

Answer :

Based on the given information, the price of the stock will remain constant at $62.50 in the future, as the company plans to pay constant annual dividends of $5.00, and the required rate of return is same.

The price of a stock can be calculated using the dividend discount model (DDM), which considers the present value of future dividends. In this case, since the dividends are expected to remain constant and the required rate of return is expected to stay the same, the price of the stock will not change.

Therefore, the price of the stock is expected to remain at $62.50 even after 10 years. It's important to note that various factors can influence stock prices in the market, so it's always advisable to consider additional information and perform a thorough analysis when making investment decisions.

Learn more about dividend discount models here:

https://brainly.com/question/32294678

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