Boehm Incorporated is expected to pay a $1.50 per share dividend at the endof this year (i.e., D1 = $1.50). The dividend is expected to grow at a constantrate of 6% a year. The required rate of return on the stock, rs, is 13%. Whatis the estimated value per share of Boehm’s stock?

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Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Boehm Incorporated is expected to pay a $1.50 per share dividend at the end
of this year (i.e., D1 = $1.50). The dividend is expected to grow at a constant
rate of 6% a year. The required rate of return on the stock, rs
, is 13%. What
is the estimated value per share of Boehm’s stock?

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