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Growing, Inc. is a firm that is experiencing rapid growth. The firm yesterday paid a dividend of $7.70. You believe that dividends will grow at
Growing, Inc. is a firm that is experiencing rapid growth. The firm yesterday paid a dividend of $7.70. You believe that dividends will grow at a rate of 25.0% per year for two years, and then at a rate of 5.0% per year thereafter. If you expect an annual rate of return of 23.0% on this investment and you plan to hold the stock indefinitely, what is the most you would pay for the stock now?
a. $45.17
b. $53.49
c. $70.18
d. $62.17
e. $49.73
I know the answer is D, but I need the calculation, thx.
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