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If the dividends of a company are $1.00 today and are expected to grow at 20% per year for the next 2 years, they will
If the dividends of a company are $1.00 today and are expected to grow at 20% per year for the next 2 years, they will be $ 1.44 at the end of year 2. If dividends will grow at 4% forever from year three on, what should the price of their stock be at the end of year 2 if investors require a 14% return? (what is P2).
Suppose a company expects dividends to be $2.50 next year. They forecast that dividends will grow at the rate of 4 % per year forever. If the required return for this stock is 14%, the price of the stock should be:
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