Question: PLEASE REPLY ASAP = Suppose you are considering a purchase of stock of XYZ Corporation in period t = 0. It is expected that XYZ

PLEASE REPLY ASAP = Suppose you are considering a purchase of

PLEASE REPLY ASAP

= Suppose you are considering a purchase of stock of XYZ Corporation in period t = 0. It is expected that XYZ will pay $10 in dividends in t = 3 and no dividends in t = 1, 2, 4, 5, 6, 7, 8, 9. Your broker believes that XYZ will pay $20 in dividends in t = 10. The broker also believes that dividends will grow at the rate of 5% from t = 10 on. The required return on investment in equity is 10%. a. Write an equation that equates the present value with a discounted stream of pay- ments in the future. b. Find the price of the stock of XYZ Corporation today, in t=0, using the equation in part a. Show your work. a

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