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Company ABC's earnings and dividends will grow at 0.5% monthly during the next 5 years. Its growth will stop after year 5. in year 6 and afterward, it will pay out all earnings as dividends. Assume next year's EPS is $10 and the dividend is $5 and the market capitalization is 9%.

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Solution Summary

The solution explains how to calculate the stock price using the dividend discount model.

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