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Assume that a company just paid a dividend of $2.20. Your research indicates that analysts believe earnings and dividends will grow 8% a year for
Assume that a company just paid a dividend of $2.20. Your research indicates that analysts believe earnings and dividends will grow 8% a year for the foreseeable future. Based on returns that other similar stocks are currently offering, you believe that an acceptable rate of return for investing in this stock would be 15%. What would you be willing to pay for the stock today?
Under the same assumptions, what would you expect this stocks price to be:
a. One year from now?
b. Two years from now?
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