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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

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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 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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