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Prescott Pharmaceuticals will pay an annual dividend of $0.81 one year from now. Analysts expect this dividend to grow at 12.1% per year thereafter until
Prescott Pharmaceuticals will pay an annual dividend of $0.81 one year from now. Analysts expect this dividend to grow at 12.1% per year thereafter until the end of year 12. After this period, growth will level off at 4.0% per year (that is, the t= 13 cash flow will be 4.0% bigger than that the t= 12 cash flow). According to the dividend-discount model, what is the value of a Prescott Pharmaceuticals share if the firm's equity cost of capital is 11.0%? a. $20.30 b $21.33 O c. $22.39 O d. $23.30 O e. $19.28
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