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Quiz 2, Fin 350. Please use the following information to answer questions 1-5. A stock pays a level dividend of $4 per share every year forever. The discount rate is 10%. What is the stock price at year 5? $30. $40. $50. $60. None of the above (B) P5= Div/r = 4/0.1=$40, since the dividends after year 5 forms a standard perpetuity and the stock price at year 5 is the present value at year 5 of ... ................
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