Given the expected earnings and dividend payments in question no. 10, if you expect a selling price of $110 and require an 8 percent return on this investment, how much would you pay for the BBC stock?
Over the long run, you expect dividends for BBC in question no. 10 to grow at 8 percent and you require 11 percent on the stock. Using the infinite period DDM, how much would you pay for this stock?
Based on new information regarding the popularity of basketball, you revise your growth estimate for BBC to 9 percent. What is the maximum P/E ratio you will apply to BBC, and what is the maximum price you will pay for the stock?