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Sophia estimates the rate of growth of dividend for XYC will be 14% for the next 4 years. The market capitalization rate for XYC is
Sophia estimates the rate of growth of dividend for XYC will be 14% for the next 4 years. The market capitalization rate for XYC is 9%. After this initial period of 4 years the dividend is expected to grow at a rate of 5% forever after. You forecast that the dividend next year (this includes 1 year of growth at a rate of 14%) will be $0.94. Calculate Sophia's intrinsic value for XYC. (As you complete this question, please take your time to consider why you use different numbers. If you have a similar question on the exam it is unlikely to be identical. Can you deal with small changes in wording or are you just learning to solve this very precise wording? If that is the case, you might be in trouble during the exam.) Your
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