Great Lakes Christmas Tree Co. expects to pay an annual dividend of $2 per share in perpetuity on its preferred shares starting one year from now. The firm is committed solely to its steady North American Christmas tree business (as opposed to, say, diversifying into landscape shrubbery). This profile warrants a required return of 8% What is the present value of this dividend stream for investors?

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Valuing a perpetuity The value of the perpetuity depends on the amou... View the full answer