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One year from today, investors anticipate that Amazing Inc. stock will pay a dividend of $3.25 per share. After that, investors believe that the dividend
One year from today, investors anticipate that Amazing Inc. stock will pay a dividend of $3.25 per share. After that, investors believe that the dividend will grow at 20% per year for three years before settling down to a long-run growth rate of 4%. The required rate of return on Amazing stock is 15%. Required: a) Calculate the current stock price. b) Discuss the limitations of using the Dividend Discount Model of share valuation.
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