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Stock with Dividend Growth II Consider a stock issued by a start-up company. To focus on growing the business, the company will not pay any
Stock with Dividend Growth II
Consider a stock issued by a start-up company. To focus on growing the business, the company will not pay any dividend until year 3. It plans to pay the first dividend of $0.2 per share in year 4 and the next dividend of $0.3 per share in year 5. Since then, the dividend will grow at 10% per year. The required return on stock is 12%, and the risk-free rate is 3%. What is the current stock price?
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