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You are interested in buying a share that paid its last annual dividend 6 months ago. You can assume that the next dividend payment (6 months from today) will be €1.80. The company anticipates that dividend growth rates will be 6% annually for the next two dividends and 2.5% thereafter. Assuming the firm’s cost of equity rE is 8%, how much should you pay for the share?

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Financial Management, Finance

Category:- Financial Management
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