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18. CX Enterprises has the following expected dividends: $1 in one year, $1.15 in two years, and $1.25 in three years. After that, its dividends are...

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18. CX Enterprises has the following expected dividends: $1 in one year, $1.15 in two
years, and $1.25 in three years. After that, its dividends are expected to grow at
4% per year forever (so that year 4’s dividend will be 4% more than $1.25 and so on).
If CX's equity cost of capital is 12%, what is the current price of its stock?

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8 comments
  • what if the percentage changed and it is 11% r and 3% g how would it change
    • mageban
    • Jun 02, 2018 at 1:45pm
  • and dividend is 8%
    • mageban
    • Jun 02, 2018 at 1:46pm
  • yes, all calculations will change as there will be a change in discount rate and dividend growth rate
    • payaljain3
    • Jun 02, 2018 at 1:49pm
  • can you confirm if the answer will be 35 just wanna make sure if i am doing it correctly
    • mageban
    • Jun 02, 2018 at 1:51pm
  • CX Enterprises has the following expected​ dividends: ​$1 in one​ year, ​$1.13 in 2​ years, and ​$1.20 in 3 years. After​ that, its dividends are expected to grow at 5​% per year forever​ (so that year​ 4's dividend will be 5​% more than ​$1.20 and so​ on). If​ CX's equity cost of capital is 13​%, what is the current price of its​ stock?
    • mageban
    • Jun 02, 2018 at 1:53pm
  • how would i solve this i am not getting a correct answer
    • mageban
    • Jun 02, 2018 at 1:53pm
  • I request you to post it as a separate question
    • payaljain3
    • Jun 02, 2018 at 1:58pm
  • posted it
    • mageban
    • Jun 02, 2018 at 2:03pm

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The current price... View the full answer

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