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A stock provides dividends of $10/year, and the prevailing market return (r) equals 6%. a) Assuming that the dividends never grow, what is the most

A stock provides dividends of $10/year, and the prevailing market return (r) equals 6%.

a) Assuming that the dividends never grow, what is the most you would be willing to pay for the stock?

b) Now assume that historically the stocks dividends have grown at a rate of 4% per year . . . what is the most you would be willing to pay for the stock?

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