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Q8- Firm A is expected to have a 25 percent growth rate for the next four years (effecting dividends di, d2, d3 and d4). Beginning
Q8- Firm A is expected to have a 25 percent growth rate for the next four years (effecting dividends di, d2, d3 and d4). Beginning in year five, the growth rate is expected to drop to 7 percent per year and last indefinitely. If firm A just paid a $2.00 dividend and the appropriate discount rate is 15 percent, 1. Fill in the following table: (10 pts) Time Period Dividend PV 1 $ $ $ 2 3 $ $ 4 $ $ 5 $ 2. Determine the current value of a share of firm A? (10 pts.)
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