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    Value of Stock and Annual Dividend Payments

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    A common Stock pays an annual dividend per share of $1.60. The risk-free rate is 5 percent and the risk premium for the stock is 4 percent. If the annual dividend is expected to remain at $1.60 per share. What is the value of the stock?

    a. $17.18
    B. $32.00
    c. $40
    D. none of the above.

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    Solution Summary

    The solution discusses what is the value of the stock.