Maintain a constant dividend growth rate

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The Queensland Border Company has just paid an annual dividend of $4.20 per share and is expected to pay annual dividends of $4.40 with probability 100% next year, and either $4.00 or $5.00 per share (with equal probability) in two years, respectively. After that, the firm expects to maintain a constant dividend growth rate of 2% per year. What is the value of this stock today if the required return is 14%?

Reference no: EM132045269

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