Angel recently purchased a block of 100 shares of Hayley's Optical common stock for $6,000. The stock is expected to provide an annual cash flow of dividends of $400 indefinitely
Assuming a discount rate of 8 percent, how does the price Angel paid compare to the value of the stock?
The value of the stock is = = $5,000
Angel paid $1,000 more than the value of the stock.
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