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An analyst produces the following series of annual dividend forecasts: Year Expected dividend t+1 $10 t+2 $20 t+3 $10 The analyst believes that dividends will
An analyst produces the following series of annual dividend forecasts:
Year | Expected dividend |
t+1 | $10 |
t+2 | $20 |
t+3 | $10 |
The analyst believes that dividends will be zero after year t+3. The companys cost of equity is 10 per cent. Under these assumptions, what will be equity value at the end of year t?
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