Answer:
$8.62
Explanation:
In order to calculate this you just have to do a rule of thirds, in this case you need a 14.5% of rate return to compensate for the risk, so that 14.5% should be equal to the annual dividend, so 14.5%=1.25 how much would the 100% would be and that is the cost per share:
[tex]\frac{1.25}{14.5} =\frac{x}{100}\\ x=\frac{1.25(100)}{14.5} \\x=\frac{125}{14.5}\\ x=8.62[/tex]
So we now know that the maximum per share that you would be willing to pay would be 8.62 dollars.
