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4. (5 pts) XYZ common stock is expected to have extraordinary dividend growth of 20 percent per year for two years, after which time the
4. (5 pts) XYZ common stock is expected to have extraordinary dividend growth of 20 percent per year for two years, after which time the growth rate will settle into a constant 6 percent. If the required rate of return on this stock is 15 percent and the last dividend was $3, what should be the current share price? 5. (5 pts) You have just read an ad which says: Deposit $550,000 with us today, and we will pay you $36,000 per year from year 1 to year 19 and $150,000 in year 20." If the interest rate is 4%, would you accept this deal? Why
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