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1.Growing, Inc. is a firm that is experiencing rapid growth. The firm yesterday paid a dividend of $3.40. You believe that dividends will grow at
1.Growing, Inc. is a firm that is experiencing rapid growth. The firm yesterday paid a dividend of $3.40. You believe that dividends will grow at a rate of 19.0% per year for two years, and then at a rate of 7.0% per year thereafter. You expect the stock will sell for $17.17 in two years. You expect an annual rate of return of 22.0% on this investment. If you plan to hold the stock indefinitely, what is the most you would pay for the stock now?
a. $32.07 b.$25.47 C.18.09 D.21.51 E.29.63
2.Growing, Inc. is a firm that is experiencing rapid growth. The firm yesterday paid a dividend of $7.00. You believe that dividends will grow at a rate of 20.0% per year for three years, and then at a rate of 9.0% per year thereafter. You expect that the stock will sell for $235.44 in three years. You expect an annual rate of return of 16.0% on this investment. If you plan to hold the stock indefinitely, what is the most you would pay for the stock now?
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