Market rate of return on stocks


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

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Finance Basics: Market rate of return on stocks
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