Explore BrainMass
Share

Explore BrainMass

    Calculating the maximum offer price

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Evaluate the stock that paid a dividend of $4.25 last year and is currently selling for $36 per share. If your company decides to buy the stock, the stock will be held for 5 years and then sold. The growth rate on the stock is a constant at 3% per year and your company's required return on the stock would be 11%. What's the maximum price per share that your company should pay for stock? Show work.

    © BrainMass Inc. brainmass.com October 10, 2019, 8:00 am ad1c9bdddf
    https://brainmass.com/business/interest-rates/603774

    Solution Summary

    This solution depicts the steps to estimate the fair value of stock.

    $2.19