Determine what is maximum price that would be willing to pay

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Question 1: You are appointed as a financial consultant for a listed company. You are to evaluate the company's common stock based on the following information and assumptions: The company is expected to pay zero dividend for the first two years due to the heavy investment costs. After that, it is expected to pay dividend of $2.50 in the following year, following by abnormal growth rate of 20% and 25%, in the following two years, and after that dividend is expected to grow by 6% per year throughout the foreseeable future. If your opportunity cost is 9% for investment of this risk level, what is the maximum price that you would be willing to pay for a share of this stock?

Reference no: EM132584857

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