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A. Suppose a company has never paid a dividend. However, in two years they plan to start paying dividends (end of Year 2). The first
A. Suppose a company has never paid a dividend. However, in two years they plan to start paying dividends (end of Year 2). The first dividend is expected to equal $2 per share, dividends thereafter are expected to grow at a 5 percent rate. If investors require a 15 percent rate of return to purchase the companys common stock, what should be the market value of its stock today?
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