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(a)How would you differentiate between Market value, Book value and Liquidation value of common stock? (b) Fair Co has an odd dividend policy. The company
(a)How would you differentiate between Market value, Book value and Liquidation value of common stock?
(b) Fair Co has an odd dividend policy. The company has just paid a dividend of $3.5 per share and has announced that it will increase the dividend by $4 per for the next year and the same growth pattern will follow for further three years. Additionally, it will then never pay another dividend. If you require an 11% return on the company's stock, how much will you pay for a share today?
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