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hat should be the stock price today if the discount rate is 4%?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 17P

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Question

SlowGrowth Corporation currently pays a dividend of $2.3 per year. Stock analysts
expect the company would continue to pay the current dividend amount for three years
and, after the three years, increase dividend by 2% per year in perpetuity. According to
the stock analysts forecast of future dividends, what should be the stock price today if the
discount rate is 4%?

Leveraging special tenchniques in analyzing historical data to predict future trends. Forecasting covers the methods and types of forecasting and their application to case studies.

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