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application of the two-stage dividend growth model

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Jockey Co. has a cost of equity capital estimated to be 15%. They have a current dividend of $3 per share and analysts expect the dividend to grow at a rate of 25% a year for the next 3 years, and then it will grow at a constant rate of 10% per year. What is the current stock price of Jockey Co.?

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An application of the two-stage dividend growth model is featured.

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This is an application of the two-stage dividend growth model, in which dividends are assumed to grow at a given rate for a certain number of year and, after that, grow at another (usually lower) rate. In order to find the value of the stock, we have to ...

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