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Bob Corp. (BC) currently pays an annual dividend of $2 per share (assume dividends are paid at the end of each year). Investors expect the
Bob Corp. (BC) currently pays an annual dividend of $2 per share (assume dividends are paid at the end of each year). Investors expect the dividend to stay at $2 per share for the next two years and grow at a constant rate of 3% per year after year 2. BCs equity beta is 0.8, the risk-free rate is 4% and the market risk premium (E[r_m-r_f ]) is 5%. What should be the current price per share of BC?
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