What should the value of the stock be

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a. The last dividend was $2.50, but now is expected to grow at 10% forever, and Ke remains 25%, what would the price be now?

b. Things are not as great as originally thought. The last dividend was $2.50. It is expected to grow by 10% for only the next 3 years, but then decline to 5% and stay at that rate forever after. The Ke remains 25%. What should the value of the stock be?

Reference no: EM131020843

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