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What is the value of one share of bb stock

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Question: The BB Corporation paid its first dividend yesterday of $3/share. BB is expected to be able to grow dividends at 9% for the next two years (i.e., between t=0 and t=1, and between t=1 and t=2), then grow dividends at 5% for the two years after that (from t=2 to t=3, and from t=3 to t=4), and then settle into a steady state where they will grow dividends at 3% per year forever (from t=4 to t=5, and thereafter). If the risk free rate is 4.5%, and BB's beta is 1.5, what is the value of one share of BB stock? Assume a market risk premium of 7%.

Reference no: EM133074415

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