. Dividend discount model: Consider the following three stocks: a. Stock A is expected to provide...

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. Dividend discount model: Consider the following three stocks:a. Stock A is expected to provide a dividend of $15 a shareforever. b. Stock B is expected to pay a dividend of $9 next year.Thereafter, dividend growth is expected to be 4% a year forever. c.Stock C is expected to pay a dividend of $9 next year. Thereafter,dividend growth is expected to be 30% a year for three years (i.e.,years 2 through 4) and zero thereafter. If the marketcapitalization rate for each stock is 8%, which stock is the mostvaluable? What if the capitalization rate is 11%?

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stock A1 at 8Present Value of Perpetuity Perpetual Cash flow market capitalization rate 1508 187502 at 11Present Value of Perpetuity Perpetual Cash flow market capitalization rate 1511 13636 stock B1 at 8Po D1 Ke gWherePo Current See Answer

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. Dividend discount model: Consider the following three stocks:a. Stock A is expected to provide a dividend of $15 a shareforever. b. Stock B is expected to pay a dividend of $9 next year.Thereafter, dividend growth is expected to be 4% a year forever. c.Stock C is expected to pay a dividend of $9 next year. Thereafter,dividend growth is expected to be 30% a year for three years (i.e.,years 2 through 4) and zero thereafter. If the marketcapitalization rate for each stock is 8%, which stock is the mostvaluable? What if the capitalization rate is 11%?