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Question 15 9 pts The acquisition of Smith Brothers makes stockholders of Gertie Restaurants happy and as a result, the expectations for estimated future dividends
Question 15 9 pts The acquisition of Smith Brothers makes stockholders of Gertie Restaurants happy and as a result, the expectations for estimated future dividends of the combined company are revised. Before the acquisition, they just paid a dividend of $3.00. Dividends next year will be cut to zero to absorb the new operations, then D2 will be $3.00, D3 will be 10% higher than D2, and then the dividend growth rate will fall off to a constant 3 percent thereafter. The required return is 13.11% percent. What is the current share price based upon these new dividend estimates? $27.86 $27.24 o $27.68 $33.62 $30.13 $36.92 $27.89
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