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Now is Year 0. iDoc, a health service company, just paid a dividend of $1.50. You expect iDoc to increase its dividends by 10% per
Now is Year 0. iDoc, a health service company, just paid a dividend of $1.50. You expect iDoc to increase its dividends by 10% per year for the next two years (through Year 2), and thereafter by 3% per year. The appropriate annual discount rate (equity cost of capital) for iDoc is 8%. (a) Use the Gordon Growth model to estimate the share price of iDoc right now, i.e., in Year 0. (b) What is the expected share price of iDoc in Year 1
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