Using the multistage dividend model

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Reference no: EM132052777

Corporation A produces a good that is very mature in their product life cycles. Corporation A is expected to pay a dividend in year 1 of $1.75, a dividend in year 2 of $1.50, and a dividend in year 3 of $1.00. After year 3, dividends are expected to decline at the constant rate of 2.5% per year. An appropriate required return for the stock is 7%. Using the multistage dividend model, what is the intrinsic value of the stock? Please show work.

Reference no: EM132052777

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