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Microsoft decides to spin off its Office products into a separate division because they feel they are at a mature stage of growth. The new

Microsoft decides to spin off its "Office" products into a separate division because they feel they are at a mature stage of growth. The new company's earnings and dividends are expected to grow at a constant rate of 3% per year. If the initial dividend for the end of the first year is $4 and the company's weighted average cost of capital is 8%, what is the fair value of the new company's stock?

$100

$50

$133.33

$82.40

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