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Your company just paid a dividend of $4.0 per share. The company will increase its dividend by 5% next year and will then increase its
Your company just paid a dividend of $4.0 per share. The company will increase its dividend by 5% next year and will then increase its dividend growth rate by 2% points per year ( from 5% to 7% to 9% to 11%) until it reaches the industry average of 11% dividend growth, after which the company will keep a constant growth rate forever. The required return on your companys stock is 13%. What will a share of stock sell for today? ____(1)_____. What will a share of stock sell for in one year?_____(2)____.
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