The Menard Mustard Co. paid a dividend of $5.90 per share last year and had EPS of $9.75 and a dividend yield of 1.9% The firm normally raises dividends by 6.5% yearly.

A. If you require a return of 8.9%. what is the most you would pay for this stock based on its dividend return?

B. Assume the economy goes into a recession and the company eliminates dividends this year and expects earnings to fall by 15%. What would be the expected stock price, assuming the P/E did not change?