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A stock that currently does not pay a dividend is expected to pay its first dividend of $1.00 five years from today. Thereafter, the dividend is expected to grow at an annual rate of 25% for the next three years and then grow at a constant rate of 5% per year thereafter. The required rate of return is 10.3%. The value of the stock today is closest to:
A) $20.65.
B) $22.72.
C) $23.87.
Could someone demonstrate how this can be solved with a financial calculator?
Thanks!