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A rural telephone operator has a large number of landline customers. As the use of landline phones decline dramatically, the firm has decided to cut its dividend every year by 1.5% indefinitely (e. a negative growth rate). The most recent dividend the firm paid was $3.20 per share. Assuming a required rate of return of 8.2%, which of the following is the best estimate of the firm's current fair value? O $32.49 O $29.61 O $2624 O $32.99

A rural telephone operator has a large number of landline customers. As the use of landline phones decline dramatically, the firm has decided to cut its dividend every year by 1.5% indefinitely (e. a negative growth rate). The most recent dividend the firm paid was $3.20 per share. Assuming a required rate of return of 8.2%, which of the following is the best estimate of the firm's current fair value? O $32.49 O $29.61 O $2624 O $32.99

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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A rural telephone operator has a large number of landline customers. As the use of landline phones decline dramatically, the firm has decided to cut its dividend every year by 1.5% indefinitely (i.e. a negative growth rate). The most recent dividend the firm paid was $3.20 per share. Assuming a required rate of return of 8.2%, which of the following is the best estimate of the firm's current fair value? O $32.49 O $29.61 O $26.24 O $32.99
Transcribed Image Text:A rural telephone operator has a large number of landline customers. As the use of landline phones decline dramatically, the firm has decided to cut its dividend every year by 1.5% indefinitely (i.e. a negative growth rate). The most recent dividend the firm paid was $3.20 per share. Assuming a required rate of return of 8.2%, which of the following is the best estimate of the firm's current fair value? O $32.49 O $29.61 O $26.24 O $32.99
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