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A stock just paid a dividend of $2.32. The dividend is expected to grow at 28.59%...

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Finance

A stock just paid a dividend of $2.32. The dividend is expectedto grow at 28.59% for five years and then grow at 4.24% thereafter.The required return on the stock is 10.75%. What is the value ofthe stock?

Please shows steps in a financialcalculator.

Answer & Explanation Solved by verified expert
4.4 Ratings (667 Votes)
Step 1 Computation of market price at the end of year 5using Gordon Growth ModelP5 D6 Ke gWhereP5 Market price at the    See Answer
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A stock just paid a dividend of $2.32. The dividend is expectedto grow at 28.59% for five years and then grow at 4.24% thereafter.The required return on the stock is 10.75%. What is the value ofthe stock?Please shows steps in a financialcalculator.

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