A stock you are evaluating is expected to experience supernormal growth in dividends of 8 percent over

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A stock you are evaluating is expected to experience supernormal growth in dividends of 8 percent over the next six years. Following this period, dividends are expected to grow at a constant rate of 3 percent. The stock paid a dividend of $5.50 last year and the required rate of return on the stock is 10 percent. Calculate the stock’s fair present value. ( LG 3-3 )

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Financial Markets And Institutions

ISBN: 9780078034664

5th Edition

Authors: Anthony Saunders, Marcia Cornett

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