Gail Dribble is analyzing the shares of Petscan Radiology. Petscan’s stock pays
Gail
Dribble is analyzing the shares of Petscan Radiology. Petscan’s stock
pays a dividend once each year, and it just distributed this year’s
$0.85 dividend. The market price of the stock is $12.14. Gail estimates
that Petscan will increase its dividends by 7% per year forever. After
contemplating the risk of Petscan stock, Gail is willing to hold the
stock only if it provides an annual expected return of at least 13%.
Should she buy Petscan shares or not?
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