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1. Under the discounted dividend model, what is the value per share of a company expected to pay a $3.75 end-of-year dividend and have an

1. Under the discounted dividend model, what is the value per share of a company expected to pay a $3.75 end-of-year dividend and have an ex-dividend price of $27.50 if the market capitalization rate is 7.5%? Suppose a bad news report about the company drops the expected end-of-year ex-dividend price by 10%. Will the current stock price decrease by more or less than 10%?

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