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What is the highest price broker should be willing to pay

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Reference no: EM132869597

A broker is considering buying a dividend-paying stock. The dividend will be paid at the end of the year. The analyst consensus is the stock will be worth $36 in one year. The company pays a $2.25 annual dividend. (The ex-dividend date is not a consideration; the broker will receive the full $2.25.) The broker expects a 12% rate of return.

Problem 1: What is the highest price this broker should be willing to pay for this stock?

A. $33.89

B. $34.01

C. $34.15

D. $38.25

Reference no: EM132869597

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