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Company Z - prime s earnings and dividends per share are expected to grow by 3 % a year. Its growth will stop after year

Company Z

-

prime

s earnings and dividends per share are expected to grow by

3 %

a year. Its growth will stop after year

4 .

In year

5

and afterward, it will pay out all earnings as dividends. Assume next year

s dividend is $

9,

the cost of equity is

11 %,

and next year

s EPS is $

16 .

What is Z

-

prime

s stock price?

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