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Question 1 Suppose a hypothetical corporation is in the very late maturity stage of its industry life cycle. A decline of growth in sales &

Question 1

Suppose a hypothetical corporation is in the very late maturity stage of its industry life cycle. A decline of growth in sales & earnings is forecasted soon. Current annual DPS is $4.50. This DPS is expected to grow 6.0% per year for the next 4 years, followed by 3.0% per year growth forever. Rate of return stockholders require is 8.0%. Determine this stocks intrinsic value (P0). Show all formulas & calculations. [HINT: use the 2-stage growth model.]

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