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InterTune, Inc., just paid a dividend of $3.00 per share. You expect the dividend to increase...

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Finance

InterTune, Inc., just paid a dividend of $3.00 per share. Youexpect the dividend to increase by 15% next year, 10% the followingtwo years, and then 4% indefinitely thereafter. If you require arate of return of 10%, what is the most you should be willing topay for a share of InterTune stock?

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4.3 Ratings (872 Votes)
Under the dividend discount model the price which an investoris willing to pay for the share is the present value of futuredividends expected    See Answer
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InterTune, Inc., just paid a dividend of $3.00 per share. Youexpect the dividend to increase by 15% next year, 10% the followingtwo years, and then 4% indefinitely thereafter. If you require arate of return of 10%, what is the most you should be willing topay for a share of InterTune stock?

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