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A Firm Is Expected to Pay a Dividend of $2

Question 46

Multiple Choice

A firm is expected to pay a dividend of $2.00 next year and $2.14 the following year. Financial analysts believe the stock will be at their target price of $75.00 in two years. Compute the value of this stock with a required return of 10 percent.


A) $65.40
B) $66.67
C) $65.57
D) $79.14

Correct Answer:

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