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Which of the following three stocks is the most valuable if the market capitalization rate is 10% and support your answer: (1) Stock A is
Which of the following three stocks is the most valuable if the market capitalization rate is 10% and support your answer:
(1) Stock A is expected to provide a dividend of $10 a share forever;
(2) Stock B is expected to pay a dividend of $5 next year. Thereafter, dividend growth is expected to be 4% per year forever; or
(3) Stock C is expected to pay a dividend of $5 next year. Thereafter, dividend growth is expected to be 20% a year for five years (until year 6) and zero thereafter.
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