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Imagine a stock that is expected to pay a dividend of $3 per share next year. The dividends are expected to grow 10% per

 


Imagine a stock that is expected to pay a dividend of $3 per share next year. The dividends are expected to grow 10% per year for two years (i.e., Year 2 and 3) and then the growth rate will be 4% per year forever. If the cost of equity is 10.5% per year, what is the current stock price?

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