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Consider the following three stocks: 1. Stock A is expected to provide a dividend of $12.00 a share forever. 2. Stock B is expected to
Consider the following three stocks: 1. Stock A is expected to provide a dividend of $12.00 a share forever. 2. Stock B is expected to pay a dividend of $7.00 next year. Thereafter, dividend growth is expected to be 4.00% a year forever. 3. Stock C is expected to pay a dividend of $4.00 next year. Thereafter, dividend growth is expected to be 20.00% a year for five years (years 2 through 6 , as C recovers from a severe recession) and zero thereafter. a-1. If the cost of equity for each stock is 12.00%, what is the stock price for each of the stocks? a-2. Which stock is the most valuable? b-1. If the cost of equity for each stock is 7.00%, what is the stock price for each of the stocks? b-2. Which stock is the most valuable? Which stock is the most valuable? Which stock is the most valuable? Which stock is the most valuable? If the cost of equity for each stock is 12.00%, what is the stock price for each of the stocks? Note: Do not round intermediate calculations. Round your answers to 2 decimal places. If the cost of equity for each stock is 7.00%, what is the stock price for each of the stocks? Note: Do not round intermediate calculations. Round your answers to 2 decimal places
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