What is the maximum price per share

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Bukit Mahkota Incorporation is considering a cash purchase of Serambi Malaya's stock. During the year just completed, Serambi Malaya earned RM4.50 per share and paid cash dividends of RM2.30 per share (D0 = 2.30). Serambi Malaya's earnings and dividends are expected to grow at 20% per year for the next 2 years, after which they are expected to grow at 5% per year forever. What is the maximum price per share that Bukit Mahkota Incorporation should pay for Serambi Malaya if it has a required return of 12% on investments with risk characteristics similar to those of Serambi Malaya?

Reference no: EM132785246

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