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a) Bluebird Co. stock pays a dividend of 12 per share (perpetuity). Assuming a discount rate of 15%, what is the value of this
a) Bluebird Co. stock pays a dividend of 12 per share (perpetuity). Assuming a discount rate of 15%, what is the value of this stock? (2.5 marks) b) Penguin Inc. currently pays a dividend of 4 per share on its common stock. The dividend is expected to grow at 4% per year forever. Stocks with similar risk are currently priced to provide a 12% expected return. What is the value of the stock? (3.5 marks)
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