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Question
Florida Sports Magazine is a publicly traded company. The next dividend will be paid in one year and is expected to be $1.25 per share. Dividends are expected to grow at 10 percent a year for the next three years, and then grow at 8 percent a year thereafter. The appropriate discount rate for investing in this firm is 15 percent. What should be the current stock price?
a. $21.27
b. $10.76
c. $22.40
d. $17.33
e. $18.75
Answer
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