Face some financial difficulties


A company announced today that its next annual dividend will be $2.38 for each share. After that dividend is paid, the company anticipates to face some financial difficulties and is going to suspend dividends for 12 years. After that a constant dividend of $1.23 per share will be paid annually. The market rate of return on this stock is 11 percent. What is the current value of this stock given this announcement?

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Finance Basics: Face some financial difficulties
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