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Problem:

City Foods, is a firm that is experiencing rapid growth. The firm just paid a dividend of $2.00 yesterday. They expect to see their dividend grow at a twenty percent rate for the next two years and then level out at a continuous six percent growth rate. City Food's required rate of return is twelve percent.

Required:

Question: What is the most you would pay for City Foods' common stock now?

Note: Please provide through step by step calculations.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91169330

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