Determine the one-year dividend yield

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Problem 1: A firm has just declared that its dividend next year will be $4 per share. That amount of payment will continue for an additional 5 years, after which the annual dividend payment will fall back to the usual $2 per share, forever. If the EAR is 10%, then calculate the firm's share price. Based on that, determine the 1-year dividend yield, capital gain yield and total yield of investing in the firm's shares.

Reference no: EM132968846

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