What is the price of a stock

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1) What is the price of a stock that just paid a $5 dividend yesterday and it dividends are expected togrow at a rate of 3% per annum forever? Assume that the cost of capital is 10%

2) Because of your supreme performance in this class, I decided to buy you lunch every single day for therest of your life. Suppose that a lunch costs $10 a day and its price will never change. Also, thecomparable "quoted" interest rate is 6% per annum, compounded daily. What is value of my free offertoday, assuming you will live for 80 more years? What should it be worth to you to be able to bequeathor sell it upon your departure?

Reference no: EM133117038

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