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Suppose you expect a stock s dividend to grow at 7 % per quarter for the next 1 0 years and at 4 % per

Suppose you expect a stock

s dividend to grow at

7 %

per quarter for the next

10

years and at

4 %

per quarter

thereafter. The firm has just paid its quarterly dividend and you expect the next quarterly dividend to be $

1

per

share. What is the maximum price that you would be willing to pay for this security if you require an

8 %

quarterly

rate of return?

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