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5. (5 marks) Flueaw Co. has a dividend growth rate of 35% per year. The discount rate is 10%. The end- of-year dividend will
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Answer #1

1.
=4/1.1
=3.636363636

2.
=4*1.35/1.1^2
=4.462809917

3.
=4*1.35^2/1.1^3
=5.477084899

4.
No growth rate higher than required return or growth rate higher than industry/economy growth is not possible indefinitely

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