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Suppose a company over the next five years is going to pay the following stream of dividends: year 1 = $5 year 2 = $5
Suppose a company over the next five years is going to pay the following stream of dividends:
year 1 = $5
year 2 = $5
year 3 = $9
year 4 = $7
year 5 = $10
Starting in year 6 the company's dividend is going to grow at 6% until year 10, and then will grow at 2% forever. Suppose the company has a beta of 1.2, the risk-free rate is 2%, and the market risk premium is 6%. What is the price of the company's stock?
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