If the firm just announced that the next dividend will be


JBK, Inc., normally pays an annual dividend. The last such dividend paid was $1.60, all future dividends are expected to grow at 5 percent, and the firm faces a required rate of return on equity of 12 percent. If the firm just announced that the next dividend will be an extraordinary dividend of $16.10 per share that is not expected to affect any other future dividends, what should the stock price be?

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Financial Management: If the firm just announced that the next dividend will be
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