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You own some shares of company ABC. ABC is expected to pay a dividend of $ 5 next year. The dividend will grow at 1

You own some shares of company ABC. ABC is expected to pay a dividend of $

5

next year. The dividend will grow at

10 %

per year for two years, then at

5 %

forever. The ROE for ABC is

12 % .

The payout ratio is

0.3

What

s the price of the stock today? What

s the price of the stock in

1

year?

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