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The stock of Furniture Unlimited is currently selling for $10 per share. The firm is expected to pay 80 cents in dividends next year, and to increase that dividend by 16 cents per share for the next five years. After that, growth will settle in at a constant rate of 5%. The stock's beta is 1.25, the risk-free rate is 2.5%, and the market return is 10.5%. Use the Dividend Discount Model (DDM) to compute a fair market value and evaluate the stock.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92748986

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