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Maximum price you would be willing to pay for a share

VALUATION OF COMMON STOCK:
Spendex Corporation currently (time 0) pays a dividend of $1 per share on its common stock. Dividends are expected to grow at 10 percent per year for the next three years, then at 8 percent per year in the following two years, after which the
growth in dividends should remain constant at 5 percent. As an investor you require a 15 percent rate of return on this equity investment. What is the maximum price you would be willing to pay for a share of Spendex?

Any idea!

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VALUATION OF COMMON STOCK:
Spendex Corporation currently (time 0) pays a dividend of $1 per share on its common stock. Dividends ...

Solution Summary

This provides the steps to calculate the maximum price you would be willing to pay for a share of Spendex

$2.19