A stock of stock will pay a dividend of $1.00 a year from now, with a dividend growth of 5 percent thereafter. In the context of a dividend discount model, the stock is correctly priced at $10 today. According to the constant growth dividend model, if the required return is 15 percent, what should the stock be worth two years from now?

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The constant growth dividend model can be expressed as follows P D r g where P curre... View the full answer