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Rainbow Lorikeet Ltd. has just paid a dividend of $2.5 per share. It plans to increase its dividend by 20% next year and then cut
Rainbow Lorikeet Ltd. has just paid a dividend of $2.5 per share. It plans to increase its dividend by 20% next year and then cut its dividend growth rate by 5 percentage points per year until it reaches the industry average of 5.0%. After that, the company will keep a constant growth rate forever. The required rate of return on Rainbow Lorikeet Ltd. is 10%. What is its shares worth today?
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