**Problem Description:**CX Enterprises has the following expected dividends:- $1.04 in one year,- $1.18 in two years,- $1.33 in three years.After that, its dividends are expected to grow at 4% per year forever (so that year 4's dividend will be 4% more than $1.33, and so on). If CX's equity cost of capital is 11.7%, what is the current price of its stock?

Cost of capital = 11.7% Dividend in year 3 = $ 1.33 Growth rate after year 3 = 4% As per formula…

Answered: CX Enterprises has the following…

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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