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QUESTION
The Bank of America is considering its dividend policy.
The Bank of America is considering its dividend policy. It can either choose to pay a total dividend of US$8,500 each quarter for the next two quarters or it can pay US$8,000 in this quarter, reinvest US$500 in the firm. The required return is 15% per annum. What will be the value of The Bank's stock if it opts to pay US$8500 as total dividend each quarter?
