Verizon (ticker: VZ) plans to pay a $0.90 dividend to investors next year. After that,...
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Verizon (ticker: VZ) plans to pay a $0.90 dividend to investors next year. After that, dividends will grow at 20% for 2 years, then they will grow at 15% for 2 more years, then they will finally settle at a constant growth of 4% indefinitely.
Investors require a rate of return of 13% on their investment in Verizon. a) List all relevant dividends that we will need to find the price of the stock.
b) What is the terminal price?
c) What is the current price of the stock?
d) What will the stock price be in year 3?
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