Suppose your company is considering buying Cameroon's Private Oil (CPOX) company. To price the buyout, use the dividend discount model. To get a price, make some simplifying assumptions. They are:

• your company's yield will not change from the buyout,
• your company's market capitalization is $50 bil.,
• you expect the buyout to increase the size of your company's dividend by 15%, and
• your company will pay a constant dividend payment in perpetuity.

What is the maximum your company should be willing to pay for CPOX?

$7.5 bil.

15% more than CPOX's market capitalization.

$50 bil.

not enough information is provided to answer the question.