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After careful research, you estimate that each of two stocks will be worth $100 in 3 years. Stock A pays a dividend of $4 per year and is expected to stay at this level for the next 3 years. Stock B pays an annual dividend of $4 currently but it is expected to increase at a rate of 10% per year for 3 years. What is the price today of both Stock A and Stock B, assuming a 6.5% required rate of return?

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Financial Management, Finance

Category:- Financial Management
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