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You are thinking to invest in the common stock of a mature company with a stable history of growth. The beta of the stock is 0.8. The market risk premium is 6% and the risk-free rate is 1%.

The stock just paid a dividend of $0.8. How much are you willing to pay for this stock today if you expect the dividends to grow at a constant annual rate of 2%?

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Financial Management, Finance

Category:- Financial Management
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