Calculate the current value of one share of the corporation

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Reference no: EM132210734

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You are deciding whether to purchase some shares of a corporation. You expect that the corporation will not pay any dividends in the first three years. The estimated dividends for years four and five are as follows:

End of year four: $1.00 per share End of year five: $1.20 per share

The dividends are expected to grow at 5% per year thereafter, in perpetuity. Assuming a required return of 12% per year, calculate the current value of one share of the corporation.

Reference no: EM132210734

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