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You are considering purchasing shares of XYZ. XYZ is a start up and you believe they will pay their first dividend of $3 per share
You are considering purchasing shares of XYZ. XYZ is a start up and you believe they will pay their first dividend of $3 per share in 2 years. The dividend will then grow 20% a year for the next two ears and then slow to a growth of 5% in year 5. Using a discount rate of 10% and a dividend discount model, what should the shares trade at now?
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