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Q4 Better Mousetraps has come out with an improved product, and the world is beating a path to its door. As a result, the firm
Q4 Better Mousetraps has come out with an improved product, and the world is beating a path to its door. As a result, the firm projects growth of 20 percent per year for 4 years. By then, other firms will have copycat technology, competition will drive down profit margins, and the sustainable growth rate will fall to 5 percent. The most recent annual dividend was DIVO = $1.00 per share. a. What are the expected values of DIVI, DIV2, DIV3, and DIV4? b. What is the expected stock price 4 years from now? The discount rate is 10 percent. c. What is the stock price today? d. Find the dividend yield, DIV1/PO. e. What will next year's stock price, Pl, be? f. What is the expected rate of return to an investor who buys the stock now and sells it in 1 year
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