Ted has 10 shares of Grand Company. Based on the company's dividend policy, Ted will receive a total of $450 a year in perpetuity. What is the value of each share if the rate of interest is 8 percent?
What will be an ideal response?
Dividend per share = $450 / 10 = $45
P = D / r = 45 / 0.08 = $562.50
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