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4. A firm's most recent dividend was $2.00 and the most recent earnings were $10.00. The firm is expected to grow at 12% for the

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4. A firm's most recent dividend was $2.00 and the most recent earnings were $10.00. The firm is expected to grow at 12% for the next 5 years, and then grow forever at 8%. The required rate of return on equity (i.e. the discount rate) is 14%. (a) Calculate today's stock price. Calculate the PVGO. (b) Confirm, by directly calculating the capital gain, that the capital gain yield (i.e. %A in the stock price) in year 6 is 8% (equal to the constant growth rate). Also, confirm by direct calculation that the dividend yield is 6% over the sixth year

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