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2. Your client is planning to purchase a stock that doesn't pay dividend in the next two years. In the third year the stock will
2. Your client is planning to purchase a stock that doesn't pay dividend in the next two years. In the third year the stock will pay a dividend of Rs 10.This dividend will grow at 50% per annum for the next three years. From then onwards the perpetual growth rate will stabilize to -1.00 %(minus one percent) per annum. At 10% cost of equity of what will be the intrinsic value of this stock.
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