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Consider the following three stocks: a. Stock A is expected to provide a dividend of $11.90 a share forever. b. Stock B is expected to
Consider the following three stocks: a. Stock A is expected to provide a dividend of $11.90 a share forever. b. Stock B is expected to pay a dividend of $6.90 next year. Thereafter, dividend growth is expected to be 2.00% a year forever. c. Stock C is expected to pay a dividend of $4.10 next year Thereafter dividend growth is expected to be 18 00% a year for five years (ie, years 2 through 6 and zero thereafter a-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 a-2. Which stock is the most valuable? Stock C O Stock B O Stock A b-1. If the market capitalization rate for each stock is 5 00%, what is the stock price for each ofthe 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 E O Stock A O Stock C
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