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The last dividend on Spirex Corporation's common stock was $5.94, and the expected growth rate is 10 percent.

The last dividend on Spirex Corporation's common stock was $5.94, and the expected growth rate is 10 percent. If you require a rate of return of 29.7 percent, what is the highest price you should be willing to pay for this stock?

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Expert Solution

Stock price = D0(1 + g) / (r - g)

Stock price = $5.94(1 + 0.10) / (0.297 - 0.10)

Stock price = $33.17

jeff jeffy answered 2 years ago
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