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20. A share of common stock is more difficult to value in practice than a bond. The cash flow from owning a share of stock
20. A share of common stock is more difficult to value in practice than a bond. The cash flow from owning a share of stock comes in the form of future dividends. Today, The Company paid a cash dividend of $1 per share. Investors require an 8% return from investments such as this. If the dividend is expected to grow at a steady 4% per year, what is the current value of the stock? a $25 b. $26 C. $27 d. $52
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