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4. River Street, Inc. currently pays a dividend of $2.50 per share. The firm's cost of equity capital is 10%, and dividends are expected
4. River Street, Inc. currently pays a dividend of $2.50 per share. The firm's cost of equity capital is 10%, and dividends are expected to grow at 6% per year for the foreseeable future (i.e. forever). Based on this information, what is the value of the firm's stock today? What is the value in five years? 5. Cheap & Safe Fuel Energy, Corp. just paid a dividend of $ 3.75 per share. The firm's dividend is expected to grow at 20% for the next five (5) years. After that the growth rate is expected to be 6% forever. If investors require a return of 8% for investing in the stock of companies of similar risk, what is the value of the stock?
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