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Dream flower is a new company listed on NY Stock Exchange. The company today announced dividend of $2.00 (Dividend in year 0). Investors expect that dividend will grow at 6% annually for 10 years. The dividend growth rate from year 11 will be reduced to 2%, which will grow indefinitely. If the discount rate for this company stock is 12%, what is the value of this company stock?

Note: Dividend in year 11 = (dividened in year 10) * (1.02).

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Financial Management, Finance

Category:- Financial Management
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