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The dividend you just missed was $1. The growth rate is 5%. How much will the...

The dividend you just missed was $1. The growth rate is 5%. How much will the stock worth in year 5 assuming that the discount rate is 10%?

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Answer #1

Using Constant Growth Model,

Stock Price in Year 5 = 1(1.05)6/(0.10 - 0.05)

Stock Price in Year 5 = $26.80

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