Problem:
Ameritech Corporation paid dividends per share of $3.56 in 1992, and dividends are expected to grow 5.5% a year forever. The stock has a beta of 0.90, and the Treasury bond rate is 6.25%. (Risk premium is 5.5 %.)
Required:
Question: What is the value per share, using the stable growth model?
Note: Provide support for your rationale.