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a) Evaluate stock and calculate stock return: i) You are evaluating Home Depot (HD) stock. This stock is expected to experience supernormal growth in dividends
a) Evaluate stock and calculate stock return:
i) You are evaluating Home Depot (HD) stock. This stock is expected to experience supernormal growth in dividends of 8 percent over the next 5 years. Following this period, dividends are expected to grow at a constant rate of 4 percent. The stock paid a dividend of $4 last year, and the required rate of return on the stock is 10 percent. What is the stocks fair present value? Show your workings. [10 marks]
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