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Unformatted text preview: 8.75% ? D 0 = $3.75 g = 5.5% k cs = 8.75% Value = PV(Stage 1) + PV(Stage 2) Stage 1 : PV of super-normal dividends (estimation period). Process: calculate and find the PV of each super-normal dividend. Stage 2: PV of normal dividends (a growing perpetuity starting after the super-normal period). Process: Use GGM Formula: Due to a research development, earnings and dividends in Carlisle Corp are expected to grow at a rate of 21% for the next 4 years . After this period, the firm is expected to grow at the industry average rate of 4.25% forever. The firm recently paid a dividend of $1.45 and the required return is 10%....
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- Summer '11