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The current stock price of XYZ Corp is $100 per share. It currently pays an annual per-share dividend of $5. A respected analyst assumes that
The current stock price of XYZ Corp is $100 per share. It currently pays an annual per-share dividend of $5. A respected analyst assumes that the current growth rate of dividends will be 20% for the next 7 years, after which dividend growth will slow to 4% annually. Solve this two-stage Gordon model to compute the cost of equity.
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