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Value of stock

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Biogenetics Inc plans to retain and reinvest all of their earnings for the next 30 years. Investors believe that at the end of year 31 the firm will pay a dividend of $12 per share. The dividend will increase at a 6% rate annually thereafter. Given a return of 15%, what is the selling price of the stock?

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Solution Summary

Given a return of 15%, what is the selling price of the stock?

$2.19