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3) (3 pts) You estimate that Company A will have dividends of $3.00 next year, $3.50 per share in year two and $4.00 per share

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3) (3 pts) You estimate that Company A will have dividends of $3.00 next year, $3.50 per share in year two and $4.00 per share in three years. After year three, starting at the beginning of year 4 , the dividend is expected to grow at a constant rate of 5%. The required rate of return is 9.2%. a) Using the dividend growth model. what is your estimate for Company A's stock price at the beginning of year 4 (which is the same as the end of year 3 , or price at the end of yr 3)? This is known as the Horizon Value or Price Target in 3 years

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