Combined Communications is a new firm in a rapidly growing industry. The company is planning on...

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Combined Communications is a new firm in a rapidly growingindustry. The company is planning on increasing its annual dividendby 23 percent a year for the next 4 years and then decreasing thegrowth rate to 5 percent per year. The company just paid its annualdividend in the amount of $1.10 per share. What is the currentvalue of one share of this stock if the required rate of return is9.00 percent? $44.37 $52.83 $40.76 $47.34 $52.50

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3.8 Ratings (669 Votes)
Step 1 Computation of market price at the end of year 4using Gordon Growth ModelP4 D5 Ke gWhereP4 Market price at    See Answer
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Combined Communications is a new firm in a rapidly growingindustry. The company is planning on increasing its annual dividendby 23 percent a year for the next 4 years and then decreasing thegrowth rate to 5 percent per year. The company just paid its annualdividend in the amount of $1.10 per share. What is the currentvalue of one share of this stock if the required rate of return is9.00 percent? $44.37 $52.83 $40.76 $47.34 $52.50

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