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A. Your company is estimated to make dividends payments of $2.6 next year, $4.0 the year after, and $4.5 in the year after that. The
A. Your company is estimated to make dividends payments of $2.6 next year, $4.0 the year after, and $4.5 in the year after that. The dividends will then grow at a constant rate of 5% per year. If the discount rate is 11% then what is the current stock price?
B. A stock will pay no dividends for the next 5 years. Then it will pay a dividend of $6.23 growing at 1.98%. The discount rate is 6.87%. What should be the current stock price?
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