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1. Stock Valuation A stock is expected to pay a dividend of $3.00 per share in year 1 and $3.50 per share in year 2.

1. Stock Valuation A stock is expected to pay a dividend of $3.00 per share in year 1 and $3.50 per share in year 2. The stock price after two years is expected to be $40 per share. The equity cost of capital is 10%, whereas the risk-free rate is 3%. What is the current stock price?

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