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Two Timing Company has paid the following dividends on its common stock for the last 6 years (including the current year, year 0): YearDividends -5$
Two Timing Company has paid the following dividends on its common stock for the last 6 years (including the current year, year 0):
YearDividends
-5$ 1.00/share
-4$ 2.80
-3$ 1.90
-2$ 1.50
-1$ 1.50
0$ 4.00
Because of a weak economy, management expects future growth in dividends to only be at one twentieth (1/20) of the average rate over the last 5 years. If investors require a 18% rate of return, what would be its current price?
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