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Keidis Industries will pay a dividend of $4.75, $5.85, and $7.05 per share for each of...

Keidis Industries will pay a dividend of $4.75, $5.85, and $7.05 per share for each of the next three years, respectively. In four years, you believe that the company will be acquired for $65.00 per share. The return on similar stocks is 10.4 percent. What is the current stock price?

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Answer #1

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

A В C E 1 2 3 Dividend Year $4.75 4 1 $5.85 5 2 $7.05 6 $65.00 7 Final Dividend 4 8 Required return 10.40% 10 Current price o

Cell reference -

А В C D 1 2 Dividend Year 4.75 5.85 4 1 2 7.05 6 3 4 65 7 Final Dividend Required return 0.104 10 =NPV(C9,C4:C7) Current pric

Hope this will help, please do comment if you need any further explanation. Your feedback would be highly appreciated.

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