A firm has just paid a dividend of $1 per share but analysts expect its dividend to
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Question:
A firm has just paid a dividend of $1 per share but analysts expect its dividend to fall to $0.80 next year and then to grow 5% annually each year thereafter. If you have a required return of 8% for this stock, what is the highest price you are willing to pay for this stock?
- A. $25.93
- B. $26.67
- C. $28.00
- D. 28.74
Expert Answer:
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