I calculated 24.62 for this problem, but I was wrong: A stock is expected...
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Accounting
I calculated 24.62 for this problem, but I was wrong:
A stock is expected to pay a dividend of $1.60 at the end of the fiscal year that began today.
The growth rate is 5% (constant) and investors require a return of 11.5% on the issuer's stock.
Under the dividend discount model, what is the predicted value of this stock in 2 years (i.e., P2) if it is assumed that the stock will be in equilibrium at that time?
Can you help explain how the answer is 27.14?
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