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Stock price today using dividend discount model

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1. H&M stock is expected to pay the following dividend stream. Dividends will not be paid at t=1 and t=2, but H&M will pay $3.00/share at t=3 through t=10, inclusively. The dividend at t=11 will be $3.15, and dividends will thereafter grow at a rate of 2% each year, forever. The appropriate required rate of return for valuing H&M stock is 10%.

(a) Draw a timeline, depicting the anticipated dividend cash flows for this stock. Please be sure to show all dividends up through at least D13 (the dividend at year 13).

(b) What should be H&M's stock price today using dividend discount model?

Reference no: EM131693745

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