Response to the following problem:
Consolidated Software doesn't currently pay any dividends but is expected to start doing so in four years. That is, Consolidated will go three more years without paying any dividends, and then is expected to pay its first dividend (of $3 per share) in the fourth year. Once the company starts paying dividends, it's expected to continue to do so. The company is expected to have a dividend payout ratio of 40% and to maintain a return on equity of 20%. Based on the DVM, and given a required rate of return of 15%, what is the maximum price you should be willing to pay for this share today?