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Question 9 (1 point) Saved Today is t = 0 and the appropriate discount rate is 9%. For stock X, Div1 is expected to be
Question 9 (1 point) Saved Today is t = 0 and the appropriate discount rate is 9%. For stock X, Div1 is expected to be $3. Dividends are then expected to grow at a 2% until t = 4, and then grow at a 3% rate until t = 7 and then grow at a rate of g in perpetuity. Assuming that at t = 10 the market will price stock X based on a P10/Div11 ratio of 20, what is the implied value of g? 0% 1% 2% 20/ 1% 2% 3% 4% 5% 6% None of the above
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