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Comparison of the value of the stock

Question:

Mr. Arthur recently purchased a block of 100 shares of Bingham Corporation common stock for $6,000. The stock is expected to provide an annual cash flow of dividends of $400 indefinitely. Assuming a discount rate of 8 percent, how does the price Mr. Arthur pay compare to the value of the stock?

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Finance Basics: Comparison of the value of the stock

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