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The Duo Growth Company just paid a dividend of $1.2 per share.The dividend is expected to grow at a rate of 24% per year for thenext 3 years and then to level off to 6% per year forever. Youthink the appropriate market capitalization rate is 21% peryear.a. What is your estimate of the intrinsic value of a share ofthe stock?b. If the market price of a share is equal to this intrinsicvalue, what is the expected dividend yield?c. What do you expect its price to be 1 year from now? Is theimplied capital gain consistent with your estimate of the dividendyield and the market capitalization rate?
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