Question: Firm E is expected to pay $3 dividend in one year. This $3 dividend will keep constant for another two years and then grow by

  1. Firm E is expected to pay $3 dividend in one year. This $3 dividend will keep constant for another two years and then grow by 5% for three years. After that, the dividend will grow by 2% forever. How much would you like to pay for this stock if your required rate of return is 6%? Draw Timelines with Growth Rate Indicated

  1. Firm F is expected to pay $1.8 dividend in one year. This $1.8 dividend will keep constant for another two years and then grow by 20% for three years. After that, the dividend will keep constant again. How much would you like to pay for this stock if your required rate of return is 9%? Draw Timelines with Growth Rate Indicated

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