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Question
Garcia Inc. has a current dividend of $3.00 per share (D0 = $3.00). Analysts expect that the dividend will grow at a rate of 25 percent a year for the next three years, and thereafter it will grow at a constant rate of 10 percent a year. The company's cost of equity capital is estimated to be 15 percent. What is the current stock price of Garcia Inc.?
a. $75.00
b. $88.55
c. $95.42
d. $103.25
e. $110.00
Answer
This answer is hidden. It contains 254 characters.
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