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Gail Dribble is analyzing the shares of Pestcan Radiology, Petscans stock pays a dividend once each year, and it just distributed this years $0.85 dividend.
Gail Dribble is analyzing the shares of Pestcan Radiology, Petscans stock pays a dividend once each year, and it just distributed this years $0.85 dividend. The market price of the stock is $12.14. Gail estimates that Petscan will increase its dividends by 7% per year forever. After contemplating the risk of Petscan stock, Gail is willing to hold the stock only if it provides an annual expected return of at least 13%. Should she buy Petscan shares or not? Show the equation and how to answer.
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