Presently Stock A pays a dividend of $2.00 a share and youexpect the dividend to grow rapidly for the next four years at 20percent. Thus the dividend payments will beYear Dividend1 $1.202 $1.443 $1.734 $2.07After this initial period of super growth the rate of increase inthe dividend should decline to 8 percent. If you want to earn 12percent on investments in common stock what is the maximum youshould pay for this stock?
