You are interested in buying a share of stock in LMU Company. You expect a dividend payment of $10 next year and that the dividend will grow by 6% per year thereafter. You desire an 8% return on your purchase. According to the Gordon growth model, what is the maximum price you would pay for a share of this stock?
A) $5
B) $25
C) $100
D) $500
Correct Answer:
Verified
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