Question

The Buckeye Corporation expects to pay a dividend of $3.15 per share at the end of next year. The firm expects the dividend to continue growing at the rate of 8% per year for the foreseeable future. If you require a return of 13% per year, the most you should pay for this stock is ______?

Answer 1

Answer is $63.

Step-by-step explanation:

Price = D1/(ke- g) = 3.15/(.13 - .08) = $63

Answer is $63.