Maximum price you should pay for one of its shares

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Reference no: EM132055070

You are considering purchasing a share of DMH Enterprises. The firm is currently experiencing a stage of supernormal growth of 25% expected to last for 2 years, after which dividends will grow at a rate of 8% forever. If the required rate of return on DMH is 10%, and the firm recently paid a dividend of $4, what is the maximum price you should pay for one of its shares?

Reference no: EM132055070

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