Question: Chapter 7: Show all work Example: Suppose a firm is expected to increase dividends by 20% in year one and by 15% in year two.

Chapter 7: Show all work

Example: Suppose a firm is expected to increase dividends by 20% in year one and by 15% in year two. After that dividends will increase at a rate of 5% per year indefinitely. If the last dividend was $1 and the required return is 20%, what is the price of the stock

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