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Determine the price of the shares of the firm CALACA given that at t=0 and t=1, no dividends will be paid, but at t=2 there
Determine the price of the shares of the firm CALACA given that at t=0 and t=1, no dividends will be paid, but at t=2 there will be a dividend of 5. From this point on, the dividends will increase by 3% a year indefinitely (until infinity). The return of the risk-free asset is 2% and firms in the same sector as CALACA give a return of 25% annually.
What is the share price?
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