8.05

Genty Can Company's (GCC) latest annual dividend of $1,50 a share was pald vesterday and maintained its histonic 8 percent annual rate of growth. You plan to purchase the stock today because you believe that the dividend growth rate will increase to 9 percent for the next three years and the selling price of the stock will be $40 per share at the end of that time. a. Howlmuch should you be willing to pay for the GCC stock if you require a 13 percent return? Do not round intermediate calculations. Round your ansiner to the nearest cent. 5 b. What is the maximum price you should be willing to pay for the cCC stock if you believe that the 9 percent growth rate can be maintained indefinitely and you require a 13 percent return? Do not round intermediate calculations. Round your answer to the nearest cent. C. If the 9 percent rate of growth is achieved, what will the price be at the end of Year 3 , assuming the conditions in Part b? Do not round intermediate caicuiations. Round your answer to the nearest cent