GoGo Inc. will pay dividend of $25 at the end of year 1. Because of the uncertainty of the economic condition, GoGo decides to reduce its dividends by 5% every six years. So dividends will be $25 in years 1 to 6, $23.75 in years 7 to 12, $22.56 in years 13 to 18 and so on. If the discount rate is 8% per year, what is current share price of GoGo?

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This sum can be solved using Dividend Discount Model DDM whi... View the full answer