The Anderson Pipe Co. just paid an annual dividend of $3.75 and is expected to grow at

Question:

The Anderson Pipe Co. just paid an annual of $3.75 and is expected to grow at 8% for the foreseeable future. Harley Bevins generally demands a return of 9% when he invests in companies similar to Anderson.
a. What is the most Harley should be willing to pay for a share of Anderson?
b. Is your answer reasonable? What’s going on here? What should Harley do with this result?

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...