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You are considering investing in a common stock. The stock is expected to pay a dividend of $40, one year from today. If you buy
- You are considering investing in a common stock. The stock is expected to pay a dividend of $40, one year from today. If you buy the stock the dividends will continue forever, but the payments will become 10 percent larger each successive year. You require a 12 percent rate of return on this type of investment. How much is the most you should be willing to pay to buy a share of this stock?
- A. $200
- B. $20
- C. $40
- D. $2,000
- E. $20,000
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Contemporary Financial Management
Authors: James R Mcguigan, R Charles Moyer, William J Kretlow
10th Edition
978-0324289114, 0324289111
