What is the highest price you are willing to pay for a share


The chairman of World Food Corporation announced that the firm's dividends will grow at a rate of 18% for the next three years, and that thereafter the annual rate of growth is expected to be only 6%. The annual dividend per share is estimated to be $4 in the next year. If a required rate of return of 15% is assumed, what is the highest price you are willing to pay for a share of World Food Corporation's common stock?

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Accounting Basics: What is the highest price you are willing to pay for a share
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