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Dividends per share are forecasted to be $1.25, $1.30, $1.35, and $1.35 for years 1 through 4 respectively. Earnings per share are forecasted to be
Dividends per share are forecasted to be $1.25, $1.30, $1.35, and $1.35 for years 1 through 4 respectively. Earnings per share are forecasted to be $3.70, $4.00, $4.50, and $5.50 for years 1 through 4 respectively. The cost of equity capital is 7%. The cost of debt capital is 5%. The weighted average cost of equity capital is 6%. Using the abnormal earnings growth model, calculate year 2 cumulative dividend earnings.
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