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Lifecycle Motorcycle Company's beta is 0.8 , the market expected return is 20% , and the risk-free rate is 6 % . The company is
Lifecycle Motorcycle Company's beta is 0.8, the market expected return is 20%, and the risk-free rate is 6%. The company is expected to pay a dividend in year 1 of $2, a dividend in year 2 of $3, and a dividend in year 3 of $4. After year 3, dividends are expected to grow at the rate of 6% per year. We try to use the multistage DDM model to calculate the stock price. Use the appropriate discount rate you find from the previous questions to calculate the fair stock price today. The stock should be worth _________________ today.
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