If an investor has a 25 percent required rate of return for


Morris Company is not expected to pay a dividend until five years have elapsed. At the beginning of Year 6, investors expect the dividend to be $3 per share and to remain that amount forever. If an investor has a 25 percent required rate of return for this stock, what should he or she be willing to pay for Morris?

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Finance Basics: If an investor has a 25 percent required rate of return for
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