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Bridgeport Tire’s current dividend is $4.60. Dividends are expected to grow by 25 percent for years...

Bridgeport Tire’s current dividend is $4.60. Dividends are expected to grow by 25 percent for years 1 to 3 and 10 percent thereafter. The required rate of return on the stock is 15 percent. What is Bridgeport’s current stock price? (Round intermediate calculations to 4 decimal places, e.g. 7.1285 and final answer to 2 decimal places, e.g. 115.61.)

Stock price $______?
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Answer #1

A 1 Required rate of return on equity = 2 Growth rate from 3rd year 3 4 0 5 1 6 2 7 3 8 Terminal Value 9 B C D 15.00% 10.00%

Calc:

B D 1 Required rate of return on equity = 2 Growth rate from 3rd year 3 Present value 4 5 6 2 7 3 8 Terminal Value 9 wNPO 0.1

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