Refer to Problem 99. Suppose that a stock pays an annual dividend of $2.50 and, historically, the

Question:

Refer to Problem 99. Suppose that a stock pays an annual dividend of $2.50 and, historically, the dividend has increased 4% per year. You desire an annual rate of return of 11%. What is the most that you should pay for the stock?

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...

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