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ABC Corp. typically pays a dividend of $2 a share every year. This year the company is going to skip the dividend, and reinvest the
- ABC Corp. typically pays a dividend of $2 a share every year. This year the company is going to skip the dividend, and reinvest the retained earnings next year in an ever-lasting project that will generate an annual cash flow, starting two year from now, of 10% of the initial investment. If you are buying the stock now, how much are you willing to pay for the stock? Your discount rate is 5%.
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