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FIN 550FIN 550 Assignment 3.1/FIN 550: Corporate Financial Management Bartequa Blackmon Module 3 Assignment
- Tentamen (uitwerkingen) • 3 pagina's • 2022
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1. Turbo Technology Computers is experiencing a period of rapid growth. Earnings and 
dividends are expected to grow at a rate of 15% during next two years, at 13% in the 
third, and at a constant rate of 6% thereafter. Turbo’s last dividend was $1.15 and 
required rate or return on the stock is 12%. 
a. Calculate the value of the stock today. 
D1 = D0 (1 + gl) 
 = $1.15 (1 + 0.06) 
 = $1.22 
P 
^ 
0 = D1/ (rs – gl) 
 = 1.22/ (.15 - .06) 
= $13.56 
b. Calculate P1 
^ 
 and P2 
^ 
. 
P1 
^ 
 ...
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