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Royal Corp. just paid an annual dividend of 3 dollars per share, this is based on a 40 percent divident payout ratio (3 dollars was
Royal Corp. just paid an annual dividend of 3 dollars per share, this is based on a 40 percent divident payout ratio (3 dollars was 40 percent of total earnings per share). They expect that earnings will grow at a 3% rate, forever, and they don't expect that the dividend payout ratio will change. There are 200 million shares of common stock outstanding.
What is the current price of the stock if market requires a 16% rate of return?
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