Garrett Corp. has been going through a difficult financial period. Over the past three years, its stock

Question:

Garrett Corp. has been going through a difficult financial period. Over the past three years, its stock price has dropped from $50 to $18 per share. Throughout this downturn, Garrett has managed to pay a $1 each year. Management feels the worst is over but intends to maintain the $1 for three more years, after which they plan to increase it by 6% per year indefinitely. Comparable are returning 11%. If these projections are accurate, is Garrett stock a good buy at $18? How do you think the market feels about Garrett’s management?

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