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Assume that Majestic of the Seas has relied on the capital markets for financing in the past by issuing shares of stock. Over the past
Assume that Majestic of the Seas has relied on the capital markets for financing in the past by issuing shares of stock. Over the past three years the dividend payments were as follows: Year Dividends 1 $2.50 2 $2.70 3 $2.92 A potential investor is interested in purchasing the stock for $55 with the intention of selling it in the next three years for $67.50. Advice the potential investor on the following: I. The dividend growth rate. II. The dividend yield of the stock at the end of the three years? III. The expected rate of return for the stock if the dividend growth rate continues
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