What price per share would expect to pay

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Problem 1: A tech start-up company grows very rapidly, causing it to initially reinvest all earnings in new growth. Assume that four years from today, this company pays a dividend of $3.00 per share, which is expected to grow at 5% per year for ever. If investors require a 17% return to hold the common stock, what price per share would you expect to pay?

Multiple Choice

Option 1: $24.25
Option 2: $12.41
Option 3: $22.35
Option 4: $15.61

Reference no: EM132948838

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