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Consider the following three stocks: a. Stock A is expected to provide a dividend of $11.60 a share forever b. Stock B is expected to
Consider the following three stocks: a. Stock A is expected to provide a dividend of $11.60 a share forever b. Stock B is expected to pay a dividend of $6.60 next year. Thereafter, dividend growth is expected to be 5.00% a year forever c. Stock C is expected to pay a dividend of $4.40 next year. Thereafter, dividend growth is expected to be 21.00% a year for five years i.e years 2 through 6 and zero thereafter a-1. If the market capitalization rate for each stock is 11.00%, what is the stock price for each of the stocks? Do not round intermediate calculations. Round your answers to 2 decimal places. Stock Price Stock A Stock B Stock C a-2. Which stock is the most valuable? Stock C Stock A Stock B b-1. If the market capitalization rate for each stock is 8.00%, what is the stock price for each of the stocks? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Stock Price Stock A Stock B Stock C b-2. Which stock is the most valuable? Stock A Stock B Stock C
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