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What is current value of a share of Satellite common stock

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Question - Satellite Ltd. currently pays a common stock dividend of $0.85 per share. Dividends are expected to grow at a rate of 12 percent per year for the next four years and then to continue growing at a rate of 6 percent per year indefinitely. What is the current value of a share of Satellite's common stock to an investor who requires a 13 percent rate of return? If the market price of the share is $12, is the share over-priced, under-priced or fairly-priced. Explain your answer.

Reference no: EM132687607

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