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Cheng is considering an investment in Cho’s Chinese Restaurant. Cheng is planning to buy the stock...

Cheng is considering an investment in Cho’s Chinese Restaurant. Cheng is planning to buy the stock today, hold it for 3 years, and then expects to sell the stock for $40 at the end of 3 years. Cheng expects the first dividend to be $1.00, the second dividend to be $1.50, and the third dividend to be $2.25. If Cheng requires a 17% rate of return, what is the value of Cho’s Chinese Restaurant to Cheng today?

$28.33

$26.93

$13.24

$24.70

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