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Consider the following three stocks: a. Stock A is expected to provide a dividend of $11.90 a share forever. b. Stock B is expected to pay a dividend of $6.90 next year. Thereafter, dividend growth is expected to be 2% a year forever. c. Stock C is expected to pay a dividend of $4.10 next year. Thereafter, dividend growth is expected to be 18% a year for five years (i.e., until year 6) and zero thereafter. a-1. If the market capitalization rate for each stock is 8%, what is the stock price for each of the stocks? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Stock Price Stock A $ Stock B $ Stock C $ a-2. Which stock is the most valuable? Stock C Stock B Stock A b-1. If the market capitalization rate for each stock is 5%, what is the stock price for each of the stocks? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Stock Price Stock A $ Stock B $ Stock C $ b-2. Which stock is the most valuable? Stock B Stock A Stock C

Financial Management, Finance

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