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Assume the company pays a $2 dividend every year in perpetuity. (a) If investors require a 12 percent rate of return, what is the current

  1. Assume the company pays a $2 dividend every year in perpetuity. (a) If investors require a 12 percent rate of return, what is the current price of the stock?

    (b) How much is the PVGO (present value of growth opportunity) if the expected long-run dividend growth rate is 6 percent (as in Question 17)? (i.e., find the price difference between #17 and #18 (a))

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