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Ace Frisbee Corporation produced a good that is in consolidation state in their product life cycles. Ace Frisbee Corporation is expected to pay a dividend
Ace Frisbee Corporation produced a good that is in consolidation state in their product life cycles. Ace Frisbee Corporation is expected to pay a dividend in year 1 of $1.00, a dividend in yesr 2 of $2.00, and a dividend in year 3 of $3.00. After year 3, dividends are expected to grow at the rate of 7% per year. this company has a beta of .75. the risk free rate of return is 6% and the expected return on the market portfolio is 14%. Using the mulitstage DDM
A) what is the required rate of return?
B) what is the terminal value of the stock at the end of year 3?
C) what should be the price of the stock today?
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