Calculate the dividend per share each year

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Barnes Corporation is expected to continue paying out 100% of its earnings as a dividend. EBIT is expected to be $1,000,000 per year indefinitely. There is no debt in Barnes capital structure, it has 100,000 shares of common stock outstanding, and the corporate tax rate is 40%. The next dividend is one year from now. The required rate of return on equity is 10%. Calculate the dividend per share each year, the current market price for Barnes' stock, and the market price of the stock one year from now.

Reference no: EM131828323

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