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What is the maximum per share price
Course:- Finance Basics
Reference No.:- EM131411891




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You are considering purchasing stock of the XYZ Corporation. Your research leads you to believe that the company will pay dividends as follows: next year the company will not pay a dividend, the year following, the company will pay $1.50/share dividend, the year following that, the company will pay a $2.00/share dividend and beginning in year 4, the company will increase dividends by 3%/year over each preceding year. Since there is substantial uncertainty regarding the dividends to be paid, you believe that a 23% rate of return is appropriate for this investment. Based on this information, what is the maximum per share price you would pay for this stock?




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