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Last dividend paid was $12. During the 3 years restructuring process (beginning now), it is expected...

Last dividend paid was $12. During the 3 years restructuring process (beginning now), it is expected that the firm will experience a negative dividend growth (-10 percent). However, beginning with the fourth year the firm will become competitive again, and from that time on the firm will achieve a dividend growth of 10 percent annually. Moreover, the positive growth in the fourth year will be accompanied by an increase in dividend to $15 end of year 4. The firm's required return is 12% percent. a- Compute the expected current stock price b- If the current expected rate of return is -8% (negative), calculate the expected current stock price. c- Would you invest in this stock? Explain.

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Last dividend paid was $12. During the 3 years restructuring process (beginning now), it is expected that the firm will experience a negative dividend growth (-10 percent

ekkarill92 answered 1 year ago
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