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Stock Valuation of the Mill Due Corporation

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A15. (Stock valuation) Let's say the Mill Due Corporation is expected to pay a dividend of $5.00 per year on its common stock forever into the future. It has no growth prospects whatsoever. If the required return on Mill Due's common stock is 14%, what is a share worth?

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The solution explains how to calculate the value of a share with no growth.

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The worth of a share is the present value (PV) of all dividends. If the dividends ...

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