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Jia's Fashions recently paid a​ $2 annual dividend. The company is projecting that its dividends will grow by 20 percent next​ year, 12 percent annually for the two years after​ that, and then at 6 percent annually thereafter. Based on this​ information, how much should​ Jia's Fashions common stock sell for today if her required return is​ 10.5%?

Respuesta :

Answer:

years late but here ya go  (answer $59.16)

Explanation:

P0 =  2 * (1+0.2) / (1+0.105)  +  2 * (1+0.2) * (1+0.12)  /  (1+0.105)^2  +  

2*(1+0.2)*(1+0.12)^2 / (1+0.105)^3 +

[(2 * (1+0.2) * (1+0.12)^2 * (1+0.06) / (0.105-0.06))  /  (1+0.105)^3 ]

P0 = $59.16

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