What will be the price of the co stock


Problem:

The company has been hit hard due to increased competition. The co.'s analysts predict that earnings (and dividends) will decline at a rate of 5% annually forever. Assume that ks = 11% and Do = $2. What will be the price of the co's stock 3 year from now?

  • 27.17
  • 6.23
  • 28.50
  • 11.88
  • 20.63

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