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A new startup company will not pay dividends for the first five years of operation. It will then institute an annual cash dividend policy of
A new startup company will not pay dividends for the first five years of operation. It will then institute an annual cash dividend policy of $2.50 with a constant growth rate of 5% with the first dividend at the end of year six. The company will be in business for 25 years in total. What is the stocks price if an investor wants a 10% return?
Please show formula and handwritten work, I know the answer is $18.80
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