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please show me the solutions so i could learn how to solve Nonconstant growth model: Today Company X just issued an annual dividend of $3
please show me the solutions so i could learn how to solve
Nonconstant growth model: Today Company X just issued an annual dividend of $3 per share. If the dividends will grow at 20% in the first year, grow at 10% during the second year, and remain at that level (constant dividend) with zero growth afterwards forever, what is the stock price today? The required return is 15%. Step 1: Calculate the dividends for the first and second year. Step 2: Calculate the stock price at the end of the second year. Hint: Since dividends remain constant, apply the zero growth model. Step 3: Calculate the stock price today Step by Step Solution
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