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German Resources is involved in coal mining. The company is currently profitable and is expected to pay a dividend of 4 per share next year.

German Resources is involved in coal mining. The company is currently profitable and is

expected to pay a dividend of 4 per share next year. The company has suspended explo-

ration, however, and because its current mature operations exhaust the existing mines, you

expect that the dividends paid by the company will decline forever at an 8 percent rate.

The required return on German Resource's stock is 11 percent. Using the DDM, estimate

the value of the stock.

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