Homework Answers
Using DDM model,
Stock Price = PV(Dividends) + PV(Horizon Value)
Stock Price = 3(1.08/1.15) + 3(1.08/1.15)2 + 3(1.08/1.15)3 + 33/(1.15)3
Stock Price = 2.817 + 2.646 + 2.485 + 21.698
Stock Price = $29.65
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