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The Duo Growth Company just paid a dividend of $ 1 . 0 0 per share. The dividend is expected to grow at a rate
The Duo Growth Company just paid a dividend of $ per share. The dividend is expected to grow at a rate of per year for the next three years and then to level off to per year forever. You think the appropriate market capitalization rate is per year.
Required:
a What is your estimate of the intrinsic value of a share of the stock?
Note: Use intermediate calculations rounded to decimal places. Round your answer to decimal places.
b If the market price of a share is equal to this intrinsic value, what is the expected dividend yield?
Note: Use intermediate values rounded to decimal places. Round your answer to decimal places.
c What do you expect its price to be one year from now?
Note: Use intermediate values rounded to decimal places. Round your answer to decimal places.
d What is the implied capital gain?
Note: Use intermediate values rounded to decimal places. Round your answer to decimal places.
d Is the implied capital gain consistent with your estimate of the dividend yield and the market capitalization rate?
tablea Intrinsic value per share,b Expected dividend yield,
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