Next year Dividend(D1) = $ 2.45 per share
Growth rate will be decreasing (g) = 3.5%
Required rate of return (ke) = 7%
calculate the Price per share:
Price = $ 2.2897 + $ 21.0436
Price = $ 23.33
So, the maximum amount you should Pay is $ 23.33
ANSWER :
Given :
r = 7% = 0.07
D1 = 2.45 ($)
g = - 3.5% = - 0.035
Now,
Value of the stock currently
= D1 / (r - g)
= 2.45 / (0.07 - (-0.035))
= 23.33 ($)
Maximum that can be paid per share : 23.33 ($) (ANSWER)
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