Fair value of stock
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A certain stock has the following stream of expected dividends:
t : 1 - 2 3 4 5 6 - 7
----------------------------------------------------
CFt : $1.00 $1.10 $1.30 $1.60 $2.00
What is the fair value of this stock if the required return is 15% and the stock will be sold after the dividend is received in Year 7 for an estimated $50.00?
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Solution Summary
The fair value of a stock has been calculated by discounting the expected dividends.
Solution Preview
A certain stock has the following stream of expected dividends:
t : 1 - 2 3 4 5 6 - 7
----------------------------------------------------
CFt : $1.00 $1.10 $1.30 $1.60 $2.00
What is the fair value of this stock if the required return is 15% and the stock will be ...
Purchase this Solution
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