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. Suppose a stock is not paying any dividend now and it will not pay any in the next nine years. Exactly 10 years from
. Suppose a stock is not paying any dividend now and it will not pay any in the next nine years. Exactly 10 years from now, shareholders will receive a cash dividend of $1 per share. The cash dividend will grow at 5% per year after that. That is, investors will receive $1.05 per share 11 years from now and so on. What is the price of the stock today if the discount rate is 10% per year?
A. $20 B. $21 C. $7.71 D. $8.48 E. $8.91
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