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You want to buy a stock in a tech company that paid last year a dividend of $5.00. The firm expects to experience supernormal growth
You want to buy a stock in a tech company that paid last year a dividend of $5.00. The firm expects to experience supernormal growth over the next 4 years so they plan to increase the dividends by 15% in the following 4 years, after this period, dividends are expected to grow at a constant rate of 5 percent. If you believe that a 18% required return is appropriate for you. What is this stock worth to you now?
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