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Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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A6)
![8. Antiquated Products Corporation produces goods that are very mature in their product life
cycles. Antiquated Products Corporation is expected to pay a dividend in year 1 of $1.00, a
dividend of $0.90 in year 2, and a dividend of $0.85 in year 3. After year 3, dividends are
expected to decline at a rate of 2% per year. An appropriate required rate of return for the
stock is 8%. The stock should be worth
A. $9.01
B. $10.57
C. $20.00
D. $22.22
E. None of these is correct](https://content.bartleby.com/qna-images/question/6cb41f06-0401-4ae5-baba-59d1e9431adf/56854b16-c8ff-493d-a541-52aae65a3ccf/fbq6lym_thumbnail.jpeg)
Transcribed Image Text:8. Antiquated Products Corporation produces goods that are very mature in their product life
cycles. Antiquated Products Corporation is expected to pay a dividend in year 1 of $1.00, a
dividend of $0.90 in year 2, and a dividend of $0.85 in year 3. After year 3, dividends are
expected to decline at a rate of 2% per year. An appropriate required rate of return for the
stock is 8%. The stock should be worth
A. $9.01
B. $10.57
C. $20.00
D. $22.22
E. None of these is correct
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