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You are considering the purchase of a common stock that paid a dividend of $1.00 yesterday. You expect this stock to have a growth rate
You are considering the purchase of a common stock that paid a dividend of $1.00 yesterday. You expect this stock to have a growth rate of 10 percent for the next 3 years. The long-run normal growth rate after year 3 is expected to be 6 percent. If you require a 12 percent rate of return, how much should you be willing to pay for this stock?
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