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QUESTION

The stock of Vasallo Inc. is expected to pay the following dividends: Year 1 2 3 4 5 6 7 Dividend $3.25 $5.50 $1.75 $4.00 $4.45 $6.00 $1.

The stock of Vasallo Inc. is expected to pay the following dividends:

     Year                          2                        5           6            7

 Dividend         $3.25    $5.50    $1.75    $4.00   $4.45    $6.00    $1.50

At the end of the fourth year its value is expected to be $57.50.  What should Vasallo sell for today if the return on stocks of similar risk is 10%?

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