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What is Z-prime?s stock price

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Question

Company Z-prime?s earnings and dividends per share are expected to grow by 5% a year. Its growth will stop after year 4. In year 5 and afterward, it will pay out all earnings as dividends. Assume next year?s dividend is $10, the market capitalization rate is 8% and next year?s EPS is $15. What is Z-prime?s stock price?

 

Paper#20772 | Written in 18-Jul-2015

Price : $22
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