A share of stock just recently released a dividend for $1.50 per share, and has...
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Accounting
A share of stock just recently released a dividend for $1.50 per share, and has expected growth rate of 4.30% in the next year, 1.60% in the second year, 4.00% in the third year and 4.80% in the fourth year. Finally the firm expects the growth to become 4.50% long-term thereafter. Given that the expected discount rate on these bonds is 24.90%, what is the expected price of this stock?
(a) $7.35
(b) $7.59
(c) $8.98
(d) $7.48
Also, are there any shortcuts to this problem, such as a way to solve it using a financial calculator? (I am using the ti-84 plus). Thank you.
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