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Exercise 8: The company FFF inc. has just paid a dividend of $ 1.50 (D0 = $ 1.50). The rate of return required by investors
Exercise 8: The company FFF inc. has just paid a dividend of $ 1.50 (D0 = $ 1.50). The rate of return required by investors is 8%. a) Calculate the price of the company's shares in each of the following cases: i) Dividends will grow at a constant rate of 3% to infinity. ii) Dividends will grow at a rate of 10% for five years, then at a constant rate of 2% to infinity from the sixth year. b) What is the constant rate of growth of dividends to infinity to obtain the same stock price you calculated in a) ii)
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