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(ONLY NEED STOCK C ANSWERS) Consider the following three stocks: Stock A is expected to provide a...

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Finance

(ONLY NEED STOCK C ANSWERS)

Consider the following three stocks:

Stock A is expected to provide a dividend of $10.40 a shareforever.

Stock B is expected to pay a dividend of $5.40 next year.Thereafter, dividend growth is expected to be 2.00% a yearforever.

Stock C is expected to pay a dividend of $5.40 next year.Thereafter, dividend growth is expected to be 18.00% a year forfive years (i.e., years 2 through 6) and zero thereafter.

a-1. If the market capitalization rate for each stock is 8.00%,what is the stock price for each of the stocks? (Do not roundintermediate calculations. Round your answers to 2 decimalplaces.)

b-1. If the market capitalization rate for each stock is 5.00%,what is the stock price for each of the stocks? (Do not roundintermediate calculations. Round your answers to 2 decimalplaces.)

Answer & Explanation Solved by verified expert
4.5 Ratings (796 Votes)
Year 1 dividend 54 Year 2 dividend 54 118 6372 Year 3 dividend 6372 118 751896 Year 4 dividend 751896 118 8872373 Year 5 dividend 8872373    See Answer
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