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  3. what is the expected purchase at t? 3. consider

What is the expected purchase at t? 3. Consider a common stock with...

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Accounting

What is the expected purchase at t?

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3. Consider a common stock with the following expected dividends: $2 in one year (i.e., at t=1), $3 in two years (at t=2), $0 in three years (at t=3), $2 in four years (at t=4) and $5 in five years (at t=5). After t=5, the dividends will grow at 10% per year for two years (i.e., t=6 and t=7). After t=7, dividends will grow at 2% per year, forever. The opportunity cost of capital is 12%. You plan to purchase the common stock in three years (i.e., at t=3). What is your expected purchase price at t=3

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