The company will keep constant growth rate

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Non-constant growth (Storico Co. just paid a dividend of $3.40 per share. The company will increase its dividend by 20 percent from Year 0 to Year 1. The company will reduce its dividend growth rate by 5 percentage points per year until the end of third year when it reaches the industry average of 5 percent dividend growth. Once the industry benchmark is matched, the company will keep a constant growth rate (equal to the industry benchmark) forever.

If the required return on Storico stock is 13 percent, what will a share of stock sell for today?

Reference no: EM132020604

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