Beginning at the end of this year Amazon plans to pay dividends $6, $7, and $8 over the next three years respectively. After three years, dividends are expected to grow perpetually at a 10% rate. What is the value of the stock if investors require a 16% return to purchase the stock?
Beginning at the end of this year Amazon plans to pay dividends $6, $7, and $8 over the next three years respectively. After three years, dividends are expected to grow perpetually at a 10% rate. What is the value of the stock if investors require a 16% return to purchase the stock?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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100%
*assume all bonds make semiannual coupon payments*

Transcribed Image Text:Beginning at the end of this year Amazon plans to pay
dividends $6, $7, and $8 over the next three years
respectively. After three years, dividends are expected to
grow perpetually at a 10% rate. What is the value of the
stock if investors require a 16% return to purchase the
stock?
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