Modular Systems Inc. is expecting both earnings and dividends to grow by 15% in Year...
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- Modular Systems Inc. is expecting both earnings and dividends to grow by 15% in Year 1, 0% in Year 2, by 5%in Year 3, and at a constant rate of 10 percent in Year 4 and thereafter. The required return on Modular is 15 percent, and it sells at its equilibrium price, P0 = $49.89. What is the approximate value of its expected dividend next year?
A) $0
B) $1.25
C) $2.15
D) $2.45
E) $2.85
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