Saks is expected to pay a dividend in year 1 of $2.01, a dividend in year...

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Saks is expected to pay a dividend in year 1 of $2.01, a dividend in year 2 of $2.33, and a dividend in year 3 of $2.90. Afte

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Answer 1

Answer #1

Using DDM Model,

Stock Price in Year 3 = D₃(1 + g)/(r - g)

Stock Price in Year 3 = 2.90(1.08)/(0.11 - 0.08)

Stock Price in Year 3 = $104.40

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Answer 2

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