Milton corporation recently paid a dividend of 170 per

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Milton Corporation recently paid a dividend of $1.70 per share, is currently expected to grow at a constant rate of 5%, and has a required return of 11%. Milton Corporation has been approached to buy a new company. Milton estimates if it buys the company, their constant growth rate would increase to 6.5%, but the firm would also be riskier, therefore increasing the required return of the company to 12%. Should Milton go ahead with the purchase of the new company?

Reference no: EM13622916

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