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12 April, 07:02

Seidel Inc. is expected to pay a dividend next year of $1.53. You also expect Seidel to increase its dividend payout by 4% per year. If you require a 12% return to invest in Seidel what is the maximum price you would be willing to pay for the stock?

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  1. 12 April, 07:27
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    Answer: $19.13

    Explanation:

    The easiest way to calculate the maximum price is by making use of the formulae Vo = Div1 / (r-g) = 1.53 / (.12-.04)

    Therefore the maximum price you would be willing to pay for the stock is $19.13
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