Ben Sacramento runs a hardware store chain that his grandfather created in the 1950s, and that is

now jointly owned by him and his two cousins. Due to a dispute regarding the direction of the

business along with the investments required, Bens cousins mentioned that they would be willing to

sell their shares if Ben is prepared to pay a minimum price of $90 per share.

Last year, the company paid its shareholders a common dividend () of $3.00. The dividends for the

next 2 years ( and ) will grow at a rate of 15%, and the dividends for the following 2 years (

) will grow at a rate of 10%. Starting in Year 5 and beyond, dividends are expected to grow

at a constant rate of 4%.

The return of a US Treasury bond is currently 6%, while the return of a well-diversified stock portfolio

is 9%. The beta of this company is estimated to be 1.5.

Should Ben accept his cousins offer to buy their shares of the business at $90 a share?