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You are interested in buying a share that paid its last annualdividend 9 months ago. You can assume that the next dividendpayment (3 months from today) will be €1.50. The companyanticipates that dividend growth rates will be 5% annually for thenext two dividends and 2% thereafter. Assuming the firm’s cost ofequity rE is 9%, how much should you pay for the share?
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