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QUESTION
Nachman Industries just paid a dividend of D0 = $1.32. Analysts expect the companys dividend to grow by 30% this year, by 10% in Year 2, and at a constant rate of 5% in Year 3 and thereafter. The required return on this low-risk stock is 9.00%. What is the best estimate of the stocks current market value? why
A.
$41.59
B.
$42.65
ANSWER:
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