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Pharm Corporation is expected to pay a dividend of $2.20 per share at this years end and a dividend of $2.90 per share at the
Pharm Corporation is expected to pay a dividend of $2.20 per share at this years end and a dividend of $2.90 per share at the end of the following year. It is expected that the price of Pharm' stock will be $50 per share after two years. If Pharm has an equity cost of capital of 8%, what is the maximum price that a prudent investor would be willing to pay for a share of Pharm stock today?
a. $44.21
b. $51.18
c. $47.75
d. $47.39
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