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QUESTION 6 [5 marks] A company is currently not paying a dividend. It is expected to start paying a dividend of $4.00 per share in

QUESTION 6 [5 marks]

A company is currently not paying a dividend. It is expected to start paying a dividend of $4.00 per share in three years time. This is expected to grow at a rate of 4% per year indefinitely. The required return on equity is 8%. Compute the intrinsic value of the company stock.

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