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Question 1 ( 2 points): Consider the following two stocks: 1. Stock A is expected to provide a dividend of $10 a share forever. 2.
Question 1 ( 2 points): Consider the following two stocks: 1. Stock A is expected to provide a dividend of $10 a share forever. 2. Stock B is expected to pay a dividend of $5 next year. Thereafter, dividend growth is expected to be 20% a year for three years (years 2 through 4 ) and 4% thereafter. If the required return for each stock is 10%, what is the stock price for each of the stocks? Stock A: Stock B
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