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tHe question. d. B's expected dividend is S0.75 e. A's expected dividend is SO.75 and B's expected dividend is $1.20. Part 2: Short Answer (Each
tHe question. d. B's expected dividend is S0.75 e. A's expected dividend is SO.75 and B's expected dividend is $1.20. Part 2: Short Answer (Each question is worth 10 points. Please label and show all steps to qualify for partial credit) Q1: Professor Bai is worried about his job security, and has started to venture into a new startup. Perhaps surprisingly, he is able to take his startup to IPO within a 5-year period (please allow me to dream). The firm has just announced its first dividend of $3/share and the firm's dividend is expected to grow extremely fast for 4 years in a row at 30% each year. However, Professor Bai expects that the company will only grow at 5% after that forever (Professor Bai is vampire and lives forever!). Expected return (discount rate) for stocks is 12%. Please use the dividend discount model to price the stock at t-0. (10 points)
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