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What should be the price (P 0 ) for a common stock paying $8.00 annually in dividends if the growth rate is zero and the
What should be the price (P0) for a common stock paying $8.00 annually in dividends if the growth rate is zero and the discount rate (i.e., the required rate of return, r) is 9%? Note/Hint: A zero growth stock means that DIV0 = DIV1 = DIV2 = . = DIV , so this stock behaves like a perpetuity.
Market Price Today (P0) =
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