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You expect that Solar corporation will pay an annual dividend of $3.50 next year. In...

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Accounting

You expect that Solar corporation will pay an annual dividend of $3.50 next year. In subsequent years you expect Solars dividend to increase by 4% per year, indefinitely. The appropriate interest rate is 13% (simple annual rate).

a) Calculate the intrinsic value of a share of Solar stock.

b) Calculate what the intrinsic value of a Solar share will be in twenty years?

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