1. Stock A is expected to provide a dividend of $10 a share forever. 2....
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1. Stock A is expected to provide a dividend of $10 a share forever. 2. Stock B is expected to pay a dividend of $5 next year. Thereafter, dividend growth is expected to be 20% a year for three years (years 2 through 4) and 4% thereafter. If the required return for each stock is 10%, what is the stock price for each of the stocks?
Stock A: Stock A price today =
Stock B: Supernatural growth rate= 20.0% Constant growth rate after year 4= 4.0%
DIV1 = DIV 2 = DIV 3 = DIV 4 = Price4 = Stock B price today =
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