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2. Company ABC just paid a dividend of $1.6 per share. The firm's cost of equity is 16%. What is the expected growth rate of

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2. Company ABC just paid a dividend of $1.6 per share. The firm's cost of equity is 16%. What is the expected growth rate of dividends if the firm's stock price is currently $26? How can you evaluate whether the stock is over- or under-valued using this calculation? [15 points]

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