What is z-primes stock price


Question: Company Z-prime is like Z in all respects save one: Its growth will stop after year 4. In year 5 and afterward, it will pay out all earnings as dividends. What is Z-prime's stock price? Assume next year's EPS is $15.

Necessary Information:

Company Z's earnings and dividends per share are expected to grow indefinitely by 5 percent a year. If next year's dividend is $10 and the market capitalization rate is 8 percent.

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Finance Basics: What is z-primes stock price
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