Earnings and dividends are expected to grow

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Reference no: EM131963594

Compute X company’s stock price given the following information:

Earnings and dividends are expected to grow by 3% a year. Its growth will stop after year 4. In year 5 and afterward, it will pay out all earnings as dividends.

Assume next year dividend is $9, the market capitalization rate is 13%, and next year EPS is $16.

Reference no: EM131963594

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