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    Expected Growth Rate in ACME

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    ACME Co. will pay a dividend of $5 per share in 1 year. Its stock sells at $50 a share, and firms in the same industry provide an expected rate of return of 14 percent. What is the expected growth rate of the company's dividends?

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    Solution Summary

    Brief calculations give the expected growth rate of ACME's dividends in this given situation.