A firm that was just incorporated will pay its first dividend in 3 years, and it is
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A firm that was just incorporated will pay its first dividend in 3 years, and it is expected to be $10. The firm is then expected to pay its second dividend in 5 years (from today), and it is expected to be $12. Finally, the firm is expected to pay its third (and final) dividend 7 years from today, valued at $27.
After the third dividend, the firm will cease to exist. Given a discount rate of 8%, what is the fair stock price for this firm?
Related Book For
Business Math
ISBN: 978-0133011203
10th edition
Authors: Cheryl Cleaves, Margie Hobbs, Jeffrey Noble
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