An investor expects the dividend ratio to increase

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On a certain date, Kastbro has a stock price of $37.50, pays a dividend of $0.64, and has an equity cost of capital of 8%. An investor expects the dividend ratio to increase by 6% per year in perpetuity. He then sells all stocks that he owns in Kastbro. Given Kastbro's share price, was the reasonable action? Explaining step by step

Reference no: EM131048265

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