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Last year, XYZ Company paid a dividend of $3.40. It expects zero growth in the next...

Last year, XYZ Company paid a dividend of $3.40. It expects zero growth in the next year. In years 2 and 3, 5% growth is expected, and in year 4, 15% growth. In year 5 and thereafter, growth should be a constant 8% per year. What is the maximum price per share that an investor who requires a return of 13% should pay for XYZ common stock?

Select one:

a. $71.74

b. $68.15

c. $73.63

d. $69.91

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Answer #1

Based on the given data, pls find below:

Answer (b) :$68.15

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