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Suppose Sarah knows a company's stock currently sells for $20 per share and the required return on the stock is 0.15. She also knows that
Suppose Sarah knows a company's stock currently sells for $20 per share and the required return on the stock is 0.15. She also knows that the required return is evenly divided between the capital gains yield (G) and the dividend yield (D1/P0) (this means that if the required return is 9%, the capital gains yield is 4.5% and the dividend yield is 4.5%). If it's the company's policy to always maintain a constant growth rate in its dividends, what is the current dividend per share? Answer with 2 decimals (e.g. 1.23)
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