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    Trang Henry
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    Martell Mining's ore reserves are declining, causing falling sales and a deeper pit, raising costs. As a result, the company's earnings and dividends are declining at 5% per year. To value Martell Mining's stock, the constant growth dividend discount model is used with initial dividend of $5, growth rate of -5%, and required rate of return of 15%, yielding a present stock value of $23.75.

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    Martell Mining's ore reserves are declining, causing falling sales and a deeper pit, raising costs. As a result, the company's earnings and dividends are declining at 5% per year. To value Martell Mining's stock, the constant growth dividend discount model is used with initial dividend of $5, growth rate of -5%, and required rate of return of 15%, yielding a present stock value of $23.75.

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    11 views1 page

    Sadhsai

    Uploaded by

    Trang Henry
    Martell Mining's ore reserves are declining, causing falling sales and a deeper pit, raising costs. As a result, the company's earnings and dividends are declining at 5% per year. To value Martell Mining's stock, the constant growth dividend discount model is used with initial dividend of $5, growth rate of -5%, and required rate of return of 15%, yielding a present stock value of $23.75.

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    Martell Mining company's ore reserves are being depleted, so its sales are falling.

    Also its pit is getting deeper each year, so its costs are rising, as a result, the company's earnings and dividends are declining at the constant rate of 5 percent per year. If D=$5 and R=15%, what is the value of Martell Mining's stock?
    D1 D (1 + g) $5 [1 + (0.05)] $5 (0.95) $4.75 P0 = = 0 = = = = $23.75. rs g rs g 0.15 (0.05) 0.15 + 0.05 0.20

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