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Assume that Bon Temps is a constant growth company whose last dividend (D, which was paid yesterday) was $2.00 and whose dividend is expected to
Assume that Bon Temps is a constant growth company whose last dividend (D, which was paid yesterday) was $2.00 and whose dividend is expected to grow indefinitely at a 4% rate.
Suppose Bon Temps is expected to experience zero growth during the first 3 years and then resume its steady-state growth of 4% in the fourth year. What would be its value then? What would be its expected dividend and capital gains yields in year 1? year 4?
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