FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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YZ Inc. is experiencing rapid growth. Earnings and dividends are expected to grow at a
rate of 17% during the next 2 years, at 15% the following year, and at a constant rate of 7% during Year 4
and thereafter. Its last dividend was $1.55, and its required rate of return is 12%.
a. Calculate the value of the stock today.
b. Calculate P1 and P2 (Prices for Year 1 and Year 2).
c. Calculate the dividend and capital gains yields for Years 1, 2, and 3. 

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