Suppose a firm is expected to increase dividends by 5% in one year and by 10% in
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Question:
Suppose a firm is expected to increase dividends by 5% in one year and by 10% in year two. After that, dividends will increase at a rate of 4% per year indefinitely. If the last dividend was $4 and the required return is 10%, what is the price of the stock?
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