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1 Points Question 16 of 20 ABC is a fast growing company that paid a dividend this year of $1, which is expected to grow at 2
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Answer #1

P0 = [{D0 * (1 + g1)} / (1 + r)] + [{D0 * (1 + g1)2} / (1 + r)2] + [P2 / (1 + r)2]

= [{$1 * (1 + 0.20)} / (1 + 0.10)] + [{$1 * (1 + 0.20)2} / (1 + 0.10)2] + [$77.76 / (1 + 0.10)2]

= $1.09 + $1.19 + $64.26 = $66.55

Hence, Option "D" is correct.

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