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Suppose a firm ( like Google or Yahoo or Genentech ) currently pays no dividends. Instead, they use all profits for growth. You expect the
Suppose a firm like Google or Yahoo or Genentech currently pays no
dividends. Instead, they use all profits for growth. You expect the growth
opportunities to dry up after a while, so you forecast a $ dividend in year
You then expect that dividend to grow at for three years, and then
at in perpetuity. If the return on the similar substitute is what is
your estimate of the stock price today?
D to D
D $
Years : g ie D D and so on
Year on: g ie D D and so on
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