A) ZGW LLC will pay the following dividends over the next 4 years: Year Dividend 1...
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A) ZGW LLC will pay the following dividends over the next 4 years: Year Dividend 1 $13 on 2 $16 3 4 $19 $24 Time left 1:5 The stock is expected to sell for $96 at the end of 4 years. If you want to earn a return of 12% on this investment, what is the maximum price you would pay? (12 Marks) B) Assume the stock will grow at a constant rat 6 percent after Year 4 and you require 13.5 percent on the stock. Using the infinite period DDM, how much would you pay for this stock? (8 Marks) A) ZGW LLC will pay the following dividends over the next 4 years: Year Dividend 1 $13 on 2 $16 3 4 $19 $24 Time left 1:5 The stock is expected to sell for $96 at the end of 4 years. If you want to earn a return of 12% on this investment, what is the maximum price you would pay? (12 Marks) B) Assume the stock will grow at a constant rat 6 percent after Year 4 and you require 13.5 percent on the stock. Using the infinite period DDM, how much would you pay for this stock? (8 Marks)
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