Question
Consider the following three stocks:a.Stock A is expected to provide a dividend of $10 a share forever. b.Stock B is expected to pay a dividend
Consider the following three stocks:a.Stock A is expected to provide a dividend of $10 a share forever.
b.Stock B is expected to pay a dividend of $5 next year. Thereafter, dividend growth is expected to be 4% a year forever.
c.Stock C is expected to pay a dividend of $5 next year. Thereafter, dividend growth is expected to be 20% a year for five years (i.e., until year 6) and zero thereafter.
a-1.If the market capitalization rate for each stock is 10%, what is the stock price for each of the stocks?(Do not round intermediate calculations. Round your answers to 2 decimal places.)
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