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Declining Growth Stock Valuation
Brushy Mountain Mining Company's coal reserves are being depleted, so its sales are falling. Also, environmental costs increase each year, so its costs are rising. As a result, the company's earnings and dividends are declining at the constant rate of 8.70% per year. If D0 = $3.24 and rs = 13.75%, what is the value of Brushy Mountain's stock?
$12.52
$15.28
$16.08
$13.18
or
$12.91
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