Dividend will be an extraordinary dividend

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Reference no: EM131341420

Balloons Inc normally pays a quarterly dividend. The last such dividend paid was $1.25, all future quarterly dividends are expected to grow at 7 percent, and the firm faces a required rate of return on equity of 14 percent. If the firm just announced that the next dividend will be an extraordinary dividend of $2.45 per share that is not expected to affect any other future dividends, what should the stock price be?

$17.15

$18.77

$20.09

$19.11

Reference no: EM131341420

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