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Consider a share of common stock that paid its first dividend 10 years ago. That first dividend was $1.00. Today, the current dividend is $2.40.

  1. Consider a share of common stock that paid its first dividend 10 years ago. That first dividend was $1.00. Today, the current dividend is $2.40. The firm plans a constant growth rate of 5% forever from now on, and the current required return on the common stock is 8.5%. Given this, what is the current value of a share of this common stock?

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