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Compute the present value

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Reference no: EM133038738

Question - Compute the present value of the following. Assume the cost of equity for each of these companies is 8%.

1. Company A is expected to pay a dividend of $5 forever.

2. Company B is expected to pay a dividend of $2 next year, and after that the annual dividend is expected to grow by 3% each year.

3. Company C is expected to pay a dividend of $3 next year and this dividend will grow at 5% for three years. After year 4 the dividends will grow at 2% forever.

Reference no: EM133038738

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