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you are planning to buy one stock of XYZ Inc., you expect it to pay a $3.5 dividend in one year and you believe that
you are planning to buy one stock of XYZ Inc., you expect it to pay a $3.5 dividend in one year and you believe that you can sell the stock for $18 at that time. If you require a return of 15% on investments of this risk, what is the maximum you would be willing to pay? Now what if you decide to hold the stock for two years? In addition to the $3.5 dividend in one year, you expect a dividend of $4.40 in two years and a stock price of $22 at the end of year. Now how much would you be willing to pay now?
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