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A company just paid a dividend of $2.5. The dividend expected in one year is $1.5; the dividend expected in two years is $2.5; and
A company just paid a dividend of $2.5. The dividend expected in one year is $1.5; the dividend expected in two years is $2.5; and the dividend expected in three years is $2.0. From that point on dividends are expected to grow by 5% per year indefinitely. The appropriate discount rate for the company is 14%. The stock's fair value is:
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