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Show your work please You are evaluating a stock for purchase. You estimate that the firm will pay the following dividends in the coming years:
Show your work please
You are evaluating a stock for purchase. You estimate that the firm will pay the following dividends in the coming years: Year 1: exist2.00 Year 2: exist2.50 Year 3: exist3.00 After the third year the dividend is expected to grow at a long-term rate of 8%. Your required rate of return is 10%. A. What is the intrinsic value of this stock? B. Assume that the current price of the stock is exist120. Should you purchase the stock? Explain. C. If you purchase the stock at exist120 and your estimates (of future dividends and prices) are correct, what is the expected rate of return on your investmentStep by Step Solution
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