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Calculate the fair value of the following two stocks, assuming the required rate of return is 6%. a) a stock that promises to pay a
Calculate the fair value of the following two stocks, assuming the required rate of return is 6%.
a) a stock that promises to pay a $20 annual dividend for the next 3 years. Assume the stock worth $120 in 3 years.
b) a stock that promises to pay a $20 annual dividend today, and dividend will grow at 5% for 5 years, and remain constant thereafter.
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