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What is the value of the stock today

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Question - XYZ Corporation pays a dividend of $3.25 for the next 5 years. Return on equity is 7%. After 5 years, XYZ intends to cut the dividend by $0.50 and expects an annual growth rate of 2% as a result. What is the value of the stock today? Do you have any reservations about using the Dividend Discount Model (DDM) for pricing a stock? If so, why?

Reference no: EM132825062

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