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Porky Pig Company pays a constant $9.45 annual dividend per share and has a 35 percent tax rate. You are planning to buy shares of the firm and need an 18.83% return to compensate for the perceived risk of such ownership. What is the maximum you are willing to spend per share to buy this stock?

Porky Pig Company pays a constant $9.45 annual dividend per share and has a 35 percent tax rate. You are planning to buy shares of the firm and need an 18.83% return to compensate for the perceived risk of such ownership. What is the maximum you are willing to spend per share to buy this stock?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter7: Common Stock: Characteristics, Valuation, And Issuance
Section: Chapter Questions
Problem 8P
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Porky Pig Company pays a constant $9.45 annual dividend per share and has a 35 percent tax rate. You are planning to buy shares of the firm and need an 18.83% return to compensate for the perceived risk of such ownership. What is the maximum you are willing to spend per share to buy this stock? A B $160.23 $100.38 $80.12 $64.72 $50.19
Transcribed Image Text:Porky Pig Company pays a constant $9.45 annual dividend per share and has a 35 percent tax rate. You are planning to buy shares of the firm and need an 18.83% return to compensate for the perceived risk of such ownership. What is the maximum you are willing to spend per share to buy this stock? A B $160.23 $100.38 $80.12 $64.72 $50.19
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