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  3. a firm pays quarterly dividends. suppose the 4 div

A firm pays quarterly dividends. Suppose the 4 dividends in year 1 are all $1....

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Finance

A firm pays quarterly dividends. Suppose the 4 dividends in year 1 are all $1. The 4 dividends in year 2 are all $1.1. The 4 dividends in year n are 1.1^(n-1). The next dividend is 3 months away. What is the value of the firm if we require 20% (APR, quarterly) discount rate? (Hint: break down the sum to 4 geometric series)

37.32

39.18

38.63

40.56

Answer & Explanation Solved by verified expert
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