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Shirley's Cool Treats is expecting their ice cream sales to decline due to the increased interest in healthy eating. Thus, the company has announced that they will be reducing their annual dividend by 4 percent a year for the next four years. After that, they will maintain a constant dividend of $1 a share. Last year, the company paid dividends $1.80 per share.

a) What is this stock worth to you if you require a 10 percent rate of return?

b) What is this stock worth to you if you require a 12 percent rate of return?

Basic Finance, Finance

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