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Common Stock Valuation - The Canning Company

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The Canning Company has been hit hard by increased competition. Analysts predict that earnings and dividends will decline at a rate of 5% annually into the foreseeable future. If Canning's last dividend (D) was $2.00, and investors required rate of return is 15%, what will Canning's stock price be in 3 years?

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Solution Summary

This solution calculates the Canning stock price based on dividends that will decline at a rate of 5% annually.

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