Question
John wants to invest in a stock that is currently trading at $50 per share. The stock pays a dividend of $1.50 per share annually,
John wants to invest in a stock that is currently trading at $50 per share. The stock pays a dividend of $1.50 per share annually, which is expected to grow at a constant rate of 5% per year. John plans to hold the stock for five years and then sell it. He requires a return of 12% per year on his investment. What is the maximum price John should pay for the stock?
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Corporate Financial Management
Authors: Glen Arnold
5th edition
978-1292178066, 129217806X, 273758837, 978-0273758839
