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Business, 20.09.2020 16:01 Cocco

Fauci Corp. plans to retain and invest all of their earnings for the next 5 years. Investors believe that 6 years from now, the firm will begin to pay a dividend of $3 per share. Thereafter, the dividend will increase at 2% annually, forever. If the stock’s required return is 12%, what should the stock sell for today? (even though it will not pay dividends for 6 years)?

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