What is the most you would be willing to pay per share

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Rehfuss Comminications has paid the dividends shown in the previous 6 years.

Year Dividend per share

2015 $2.97

2014 2.83

2013 2.65

2012 2.46

2011 2.39

2010 2.25

2009 2.24

The firm’s dividend in next year is expected to be $3.11.

a. If you can earn 13% on alternative risk investments, what is the most you would be willing to pay per share?

b. If the firm’s dividends were expected to grow at previous rates through 2019, and then be the same for the indefinite future (ie, zero growth), what is the most you would be willing to pay per share? Assume the same discount rate.

Reference no: EM131500335

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