Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Foster Corporation just paid a dividend of $0.50. This company is expected to experience abnormally
high growth for the next five years: 40 percent in the first two years, 30 percent in the next two years,
and 25 percent in year 5. After that, the growth is expected to settle down to 8 percent per year
forever. If we assume that investors’ required rate of return is 10 percent, compute the current price
of the stock.

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