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S. Young, Inc: With a constant growth rate, what dividend is expected at year end?

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Assume that investors expect a 10% return on the stock of S. Young Inc. If it currently trades at $40 per share on the New York Stock Exchange and its dividend is expected to grow at a constant rate of 7%, what dividend is anticipated at the end of the year?

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Showing all the calculations, the year end dividend amount is presented in the solution.

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