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Boomer Products, Inc. manufactures "no-inhale" cigarettes. As their target customers age and pass on, sales of the products are expected to decline. Thus, demographics suggest that earnings and dividends will decline at a rate of 5% annually forever. The firm just paid a dividend of $4; given a required return of 10%, what should the stock sell for today?

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The expert calculates stock price using Dividend Discount Model.

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Boomer Products, Inc. manufactures "no-inhale" cigarettes. As their target customers age and pass on, sales of the products are expected to decline. ...

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