Question- Supernormal Growth: What if g = 30% for 1 yr, 20% for 1 yr, and 10% for 1 yr before achieving long-run growth of 4%?
From the question above, assume that the dividend will grow at 3% after three years, but all other values are the same.
a. Find the expected dividends stream for the next 4 years.
b. Find the horizon value of this stock.
c. Estimate the present value of this stock.
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