You are considering the purchase of a share of Apha Growth, Inc. common stock. You expect...

You are considering the purchase of a share of Apha Growth, Inc. common stock. You expect to sell it at the end of one year for $89.56 per share. You will also receive a dividend of $2.63 per share at the end of next year. If your required return on this stock is 13.87 percent, what is the most you would be willing to pay for Alpha Growth, Inc. common stock now?

Round the answer to two decimal places.

Solutions

Expert Solution

most you would be willing to pay for Alpha Growth, Inc. common stock now is $80.96
Statemnet showing Current Price
Particulars	Time	PVf 13.87%	Amount	PV
Cash inflows (Dividend)	1.00	0.8782	2.63	2.31
Cash inflows (Price)	1.00	0.8782	89.56	78.65
Current Price of Stock				80.96

jeff jeffy answered 1 year ago

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