You are considering investing in Lucky Cement. Suppose the Company currently paid Rs.6 and enjoying super growth and expected to pay 30% more in dividends each year for 3 years. After these three years the dividend growth rate is expected to be 4% per year forever. If the required return for this stock is 14%, what is a fair value of stock today?

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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You are considering investing in Lucky Cement. Suppose the Company currently paid Rs.6 and enjoying super growth and expected to pay 30% more in dividends each year for 3 years. After these three years the dividend growth rate is expected to be 4% per year forever. If the required return for this stock is 14%, what is a fair value of stock today?

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