Question
Kacy's, Inc. paid a dividend of $2 per share last year reflecting a supernormal growth rate of 20%. Dividends will grow at 10% for
Kacy's, Inc. paid a dividend of $2 per share last year reflecting a supernormal growth rate of 20%. Dividends will grow at 10% for the next 3 years before settling down to a constant growth of 5%. The required rate of return is 7%. What is the fair market value/price (Po) of their common stock? (5)
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