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Q4) Magnetic Corporation expects dividends to grow at a rate of 12.72% for the next two years. After two years, dividends are expected to grow
Q4) Magnetic Corporation expects dividends to grow at a rate of 12.72% for the next two years. After two years, dividends are expected to grow at a constant rate of 4.85%, indefinitely. Magnetic's required rate of return is 10.46% and they paid a $1.75 dividend today. Compute the following for Magnetic Corporation's common stock: a) Dividend at end of year 1: (0.5 points) b) Dividend at end of year 2: (0.5 points) c) Dividend at end of year 3: (0.5 points) d) Price of stock at end of year 2: (1 point) e) Price of stock today: (1 point)
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