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QUESTION 6 Sales and profits of Growth Inc. are expected to grow at a rate of 25% per year for the next six years but
QUESTION 6
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Sales and profits of Growth Inc. are expected to grow at a rate of 25% per year for the next six years but the company will pay no dividends and reinvest all earnings. After that, the dividends will grow at a constant annual rate of 7%. At the end of year 7, the company plans to pay its first dividend of $5.00 per share. If the required return is 16%, how much is the stock worth today?
A. $13.68
B. $22.80
C. $25.08
D. $20.52
E. $15.96
F. $18.24
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