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    Formula 51 Corp.

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    Formula 51 Corp. just paid a dividend of $1.45 per share. The dividends are expected to grow at 30 percent for the next eight years and then level off to a 7 percent growth rate indefinitely. If the required return is 13 percent, what is the price of the stock today?

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    Two-Stage Dividend Growth Model
    Formula 51 Corp. just paid a dividend of $1.45 per share. The dividends are expected to grow at 30 percent for the next eight years and then level off to a 7 percent growth rate indefinitely. If the required return is 13 percent, what is the price of the stock today?
    You have to find the dividend to be paid each year ...

    Solution Summary

    This solution is comprised of a detailed explanation to answer what is the price of the stock today.

    $2.19

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