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Firm AAA was set up ten years ago. The dividend payout is as follows and then to grow at a constant rate of 8% forever.

Firm AAA was set up ten years ago. The dividend payout is as follows and then to grow at a constant rate of 8% forever. Imagine required return = 11%, find stock price

Year 0 year1 year2 year3 year4 year5 year6

g NA NA NA NA 50% 25% 8%

Dividend $0 $0 $0 $0.25 $0.375 $0.469 $0.506

a. $10.94

b. $11.19

c. $10.45

d. $10.72

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