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Declining Products Corporation produces goods that are very mature in their product life cycles. Declining Products is expected to pay a dividend in year 1
Declining Products Corporation produces goods that are very mature in their product life cycles. Declining Products is expected to pay a dividend in year 1 of $1.45, a dividend of $1.35 in year 2, and a dividend of $1.30 in year 3. After year 3, dividends are expected to decline at a rate of 2% per year. An appropriate required rate of return for the stock is 8%. What should the stock be worth?
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