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Determining the highest annualized rate of return

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A company's dividend per share is expected to grow indefinitely at a rate of 6% per year. Suppose that the current stock price is 600 and the next annual dividend, payable one year from now is 20. John, Bill, and Fred each invest in the company. John invests for one year, Bill invests for two years, and Fred invests for three years. Whe expects the highest annualized rate of return?

Hint: You are supposed to use the dividend discount model.

Reference no: EM132507268

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