Presently, Stock A pays a dividend of $1.00 a share, and you expect the dividend...
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Finance
Presently, Stock A pays a dividend of $1.00 a share, and you expect the dividend to grow rapidly for the next four years at 20 percent. Thus, the dividend payments will be
Year Dividend
1 $1.20
2 1.44
3 1.73
4 2.07
After this initial period of super growth, the rate of increase in the dividend should decline to 2 percent. If you want to earn 6 percent on investments in common stock, what is the maximum you should pay for this stock?
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