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1. Suppose the Pale Hose Corp. is expected to pay a dividend next year of $2.25 per share. Both sales and profits for Pale Hose
1. Suppose the Pale Hose Corp. is expected to pay a dividend next year of $2.25 per share. Both sales and profits for Pale Hose are expected to grow at a rate of 20% for the first 3 years and then at 5% per year thereafter indefinitely. Dividend growth is expected to match sales growth. If the required return is 15%, what is the current value of a share of Pale Hose? Answer is C. but how??
A. 22.75
B. 26.00
C. 28.50
D. 32.40
E. 39.25
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