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Common Stock Value: Variable Growth
Lawrence Industries' most recent annual dividend was $1.80 per share (D o = $1.80), and the firm's required rate of return is 11%. Find the market value of Lawrence's shares when:
a) Dividends are expected to grow at 8% annually for 3 years, followed by a 5% constant annual growth rate in years 4 to infinity.
b) Dividends are expected to grow at 8% annually for 3 years, followed by a 0% constant annual growth rate in years 4 to infinity.
c) Dividends are expected to grow at 8% annually for 3 years, followed by a 10% constant annual growth rate in years 4 to infinity.
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