Calculate the present price of the stock, Financial Management

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Company Z has just been organized. It is expected to experience zero growth next year and grow at a 10% rate in year 2.  Beginning in the third year the company should attain a 5% growth rate which it will sustain thereafter. The last dividend paid was $1.0 per share. If the required return is 12%, what should be the present price of the stock?

b. What should be the price of the stock at the end of the fourth year?


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