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An analyst is following two stocks, Stock A and Stock B. Stock A just paid...

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Finance

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An analyst is following two stocks, Stock A and Stock B. Stock A just paid a dividend of $1.25. The analyst expects the dividend to grow by 15% for one year, 12% for one year, 10% for one year, and then by a constant rate of 3.5% thereafter. The required return for Stock A is 12%. Stock B is not currently paying dividends. However, it is expected to pay a dividend of $1.65 in three years. The analyst expects the dividend to grow by 12% for two years, and then by a constant rate of 3% thereafter. The required return for Stock Bis 14%. Determine Po for Stock A assuming that the analyst's dividend forecasts are correct. b. Determine Po for Stock B assuming that the analyst's dividend forecasts are correct. apter 8 Equations -Do(1+g)

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