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The earnings of a corporation increase at 2% per quarter indefinitely. Each quarter the corporation plans to pay 40% of its earnings as a stock
The earnings of a corporation increase at 2% per quarter indefinitely. Each quarter the corporation plans to pay 40% of its earnings as a stock dividend. At the start of a quarter, an investor purchases the stock to yield a nominal rate of 12% compounded quarterly. The first stock dividend is 2 payable at the end of the quarter. Calculate the theoretical price of the stock.
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