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Bob owns 100 shares of stock in DivCo. DivCo will pay dividends of $1 per share in one year, $2 per share in two years.
Bob owns 100 shares of stock in DivCo. DivCo will pay dividends of $1 per share in one year, $2 per share in two years. In three years, the company will pay a liquidating dividend of $21 per share. The required rate of return on DivCo stock is 10%. If Bob would prefer dividend (cash) income of $200 in one year and $300 in two years, what would be his dividend income in three years if he uses a homemade dividend strategy to generate his desirable annual dividend income?
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