You should be willing to pay per share of microsoft stock

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Assume Microsoft just paid a dividend of $1.56 per share. Your required rate of return is 10%, and the analysis you’ve done tells you that Microsoft should be able to grow its dividend by a rate of 7% per year. What is the most you should be willing to pay for this stock? Now let’s say you go on a two year trip around the world and come back to find that your analysis of Microsoft has not changed. What is the most you should be willing to pay per share of Microsoft stock after your two year vacation?

Reference no: EM131608441

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