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Fey Fashions expects the following dividend pattern over the next seven​ years: The company will then have a constant dividend of ​$3.00 forever. What is the​ stock's price today if an investor wants to earn a.   14​%? X iData Table (Click on the following icon in order to copy its contents into a spreadsheet.) Year 1 Year 2 Year 3 Year 4 Yeab.  22​%?

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Answer #1

Stock Price = PV(Dividends) + PV(Horizon Value)

Stock Price = 1.50/(1.14) + 1.65/(1.14)2 + 1.82/(1.14)3 + 2.00/(1.14)4 + 2.20/(1.14)5 + 2.42/(1.14)6 + 2.66/(1.14)7 + 3/(0.14)(1.14)7

Stock Price = $16.87

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