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Mathematics, 19.08.2019 18:10 ToonGamesToo

You are considering the purchase of a common stock that paid a dividend of $2.00 yesterday. you expect this stock to have a growth rate of 15 percent for the next 3 years, resulting in dividends of upper d 1 equals $ 2.30, upper d 2 equals $ 2.645, and d3 = $3.04. the longminusrun normal growth rate after year 3 is expected to be 10 percent (that is, a constant growth rate after year 3 of 10% per year forever). if you require a 14 percent rate of return, how much should you be willing to pay for this stock?

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