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4 We Have No Money, We're a Startup Next Wonder, Inc. is a startup that cannot afford to pay dividends, since it has to finance
4 We Have No Money, We're a Startup Next Wonder, Inc. is a startup that cannot afford to pay dividends, since it has to finance its rapid growth, as it aims to take over the technology world. The company will pay no dividends for 5 years, but then it plans to pay $2.5 per share, per year for the next 5 years. After these 10 years, the stock dividend will jump to $5 in year 11, and will keep increasing by 3% per year indefinitely. The required return is 8% per year. 4.1. Assume that you are computing the price of the stock, P10, at the end of year 10, just after the dividend due at the end of year 10 has been paid. What is P10? 4.2. Assume that you are computing the price of the stock, P5, at the end of year 5. What is P5? 4.3. What is the price of the stock at time 0, Po
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