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Threes Company just paid a dividend of $1.00 per share. Threes' dividends are expected to grow 6% a year indefinitely. If investors want 14% return
- Threes Company just paid a dividend of $1.00 per share. Threes' dividends are expected to grow 6% a year indefinitely. If investors want 14% return a year, what should the current stock price be?
- (6) Use the information in the previous question. Threes is considering acquiring a couple of firms for fast growth. Jack Tripper, financial manager, projects that Threes' dividends might grow 20% per year for the seven years and grow 6% a year there-after indefinitely (i.e., from year 8 through forever). If investors still require 14% return, what should the new stock price be?
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