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TUV Inc., just paid a dividend of $4.5 per share on its stock. The growth rate...

TUV Inc., just paid a dividend of $4.5 per share on its stock. The growth rate in dividends is expected to be a constant 6 percent per year indefinitely. Investors require an 20 percent return on the stock for the first three years, then a 12 percent return for the next three years, and then an 9 percent return thereafter. What is the current share price? Answer to two decimals, carry intermediate calcs. to four decimals.

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Answer #1

Please check the revised solution, there was a little mistake in my previous solution-

The current share price is calculated by discounting the future dividends-

solution g = 6% price o PV of dividends Cursent share 4.5 (149) yeslitg) 4.5(lt) - 4.5+ la - lt20 To & 4.5(1+g 4.5 (149) 4 4.

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