What should the stock price be


Normally pays an annual dividend. The last such dividend paid was $3.00, all future dividends are expected to grow at 5 percent, and the firm faces a required rate of return on equity of 10 percent. If the firm just announced that the next dividend will be an extraordinary dividend of $17.50 per share that is not expected to affect any other future dividends, what should the stock price be?

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Finance Basics: What should the stock price be
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