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5. Suppose a firm is expected to increase dividends by 20% in one year and by 15% in two years. After that, dividends will increase

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5. Suppose a firm is expected to increase dividends by 20% in one year and by 15% in two years. After that, dividends will increase at a rate of 5% per year indefinitely. If the last dividend was $1 and the required return is 20%, what is the price of the stock? 6. Suppose we are trying to value the company Inactivision, a video game developer that does not pay dividends. If the appropriate industry PE for this type of company is 20 and you predict earnings to be $2.50 per share for the coming year, what price do you forecast for this stock based on its predicted earnings

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