Revision 6 – Business Valuations

The price as of year 3 can be determined by using the formula for the present value of a stock whose dividends grow at a constant rate: P3 = D4 = $1.6930 = $28.2167. r-g .12 - .06. Note that the above formula values the stock as of year 3, using the year 4 dividend in the numerator. ................
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