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A new issue of XYZ Corp. is expected to pay a dividend according to the following schedule: Today: $2.00 End of Year 1: $2.70 End
- A new issue of XYZ Corp. is expected to pay a dividend according to the following schedule:
Today: $2.00
End of Year 1: $2.70
End of Year 2: $3.20
End of Year 3: $3.95
After year 3, this stock is expected to exhibit a constant dividend growth rate of 4% per year. If the investors required rate of return is 11%, what would be the highest price per share this investor would be willing to pay for this stock?
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