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. Dividend discount model: Consider the following three stocks:a. Stock A is expected to provide a dividend of $15 a shareforever. b. Stock B is expected to pay a dividend of $9 next year.Thereafter, dividend growth is expected to be 4% a year forever. c.Stock C is expected to pay a dividend of $9 next year. Thereafter,dividend growth is expected to be 30% a year for three years (i.e.,years 2 through 4) and zero thereafter. If the marketcapitalization rate for each stock is 8%, which stock is the mostvaluable? What if the capitalization rate is 11%?
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