A company just paid a dividend of $3 and is expected to maintain a constant 6 percent
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Question:
A company just paid a dividend of $3 and is expected to maintain a constant 6 percent growth
rate in future dividend payments. Investors require a 15 percent return on the stock for the first
three years, a 13 percent return for the next three years, and then an 11 percent return
thereafter. What price should an investor pay for the stock today?
Expert Answer:
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