New Westminster is expecting a period of intense growth and has decided to retain more...
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New Westminster is expecting a period of intense growth and has decided to retain more of their earnings to help finance that growth. As a result, they are going to reduce the annual dividend by 20% a year for the next three years. After that they will maintain a constant dividend of $1 a share. Last year, the company paid $2.25 as the annual dividend per share. What is the market value of this stock if the required rate of return is 16%?
a. $6.63
b. $7.36
c. $8.08
d. $9.61
e. $11.23
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