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The JRN Corporation will pay a constant dividend of $ 3 per share, per year, in perpetuity. Assume that all investors pay a 2 0
The JRN Corporation will pay a constant dividend of $ per share, per year, in perpetuity. Assume that all investors pay a tax on dividends and that there is no capital gain tax. The cost of capital for investing in JRN stock is
a The price of a share of JRNs stock is closest to:
$
$
$
$
b Assume that management makes a surprise announcement that JRN will no longer pay dividends but will use the cash to repurchase stock instead. The price of a share of JRNs stock is now closest to:
$
$
$
$
$
$
$
$
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