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Question
Eastern Auto Parts' last dividend was D0 = $0.50, and the company expects to experience no growth for the next 2 years. However, Eastern will grow at an annual rate of 5 percent in the third and fourth years, and, beginning with the fifth year, it should attain a 10 percent growth rate which it should sustain thereafter. Eastern has a required rate of return of 12 percent. What should be the present price per share of Eastern common stock?
a. $19.26
b. $31.87
c. $30.30
d. $20.83
e. $19.95
Answer
This answer is hidden. It contains 199 characters.
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