CNBC's Jim Cramer recently commented that Amazon (AMZN) will start paying dividends in the near future due
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Question:
CNBC's Jim Cramer recently commented that Amazon (AMZN) will start paying dividends in the near future due to all the cash flow it generates (along with a cash balance of over $19 billion). When asked about the topic, Jim made a bold prediction that Amazon will begin paying its first dividend within 5 years in the amount of $34.50 per share. Jim also projected that dividends would grow, over the next 4 years, at 12.0% per year, after which the growth rate would be a constant rate of 7.2% per year, forever.
If the appropriate discount rate for Amazon stock is 10.0%, how much should the stock sell for today based on a discounted valuation of future dividends that Jim Cramer has projected?
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