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Varigrowth Inc. just paid a dividend of $0.63 (i.e., Do = $0.63). Such dividend is expected to grow by 15% per year for the next
Varigrowth Inc. just paid a dividend of $0.63 (i.e., Do = $0.63). Such dividend is expected to grow by 15% per year for the next 3 years, after which it is expected to grow at a long-run rate of 2%. Assuming investors require a 14% return on the stock, a) What is the price at t=3? $ (to the nearest cent) b) What is its price today? $ (to the nearest cent) c) What is your total rate of return (% to two decimals) if in one year the price is $7.15 and the dividend is $0.73? % What is your dividend yield? % What is your capital gain (loss) yield? %
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