Constant growth Blix Net services provides dedicated server facilities for small businesses. The company paid per share

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Constant growth Blix Net services provides dedicated server facilities for small businesses. The company paid per share dividends of €1.21, €1.37, €1.46, €1.61, €1.76, and €1.87, respectively, in the six years spanning 2015 to 2020.

The firm’s dividend per share in 2021 is expected to be €2.02.

a. If you can earn 10% on similar-risk investments, what is the most you would be willing to pay per share in 2020, just after the €1.87 dividend?

b. If you can earn only 12% on similar-risk investments, what is the most you would be willing to pay per share?

c. Compare and contrast your findings in parts a and b, and discuss the impact of changing risk on share value.

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Blix Nets Stock Valuation We can use the constant growth perpetuity model Gordon Growth Model to estimate the maximum price per share Blix Nets stock ...View the full answer

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Principles Of Managerial Finance

ISBN: 9781292400648

16th Global Edition

Authors: Chad Zutter, Scott Smart

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Question Posted: Feb 29, 2024 05:00 AM

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Constant growth Blix Net services provides dedicated server facilities for small businesses. The company paid per share

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Blix Nets Stock Valuation We can use the constant growth perpetuity model Gordon Growth Model to estimate the maximum price per share Blix Nets stock ...View the full answer

Principles Of Managerial Finance

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