Homework Answers
HI
Here we will use Dividend Discount model to find out maximum price of share.
Here growth rate g = 6%
Recently paid dividend D0 = $4.25
Rate of return k = 15%
As per dividend discount model
Price of Stock P = D0*(1+g)/(k-g)
= 4.25*(1+6%)/(15%-6%)
= 50.06
Thanks
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