
Essentials Of Investments
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Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Transcribed Image Text:Problem 4-17 Two-stage DCF model
Company Z-prime's earnings and dividends per share are expected to grow by 3% a year. Its growth will stop after year 4. In year 5
and afterward, it will pay out all earnings as dividends. Assume next year's dividend is $9, the market capitalization rate is 13% and next
year's EPS is $16. What is Z-prime's stock price? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
> Answer is complete but not entirely correct.
Stock price
$
156.42 X
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