Chapter 12

No dividends have been declared as yet, but the firm intends to declare a dividend of D3 = $2.00 at the end of the last year of its supernormal growth. ... The PV of the stock at t = 4 must be the future value of the difference between today’s price and the PV of the dividends through t = 4. PV = $50.00 - $4.45 = $45.55. FV = $45.55(1.10)4 ... ................
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