Suppose that a friend has started a business selling software. The software is a great hit, and the firm quickly grows large enough to be able to sell stock. Your friend's firm promises to pay a dividend of $7 per share every year for the next 50 years, at which point your friend intends to shut down the business. The firm's stock is currently selling for $57 per share. If you believe that the company really will pay dividends as stated and if you require a rate of return of 15% to make this investment, should you buy the stock?
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Suppose that a friend has started a business selling software. The software is a great hit, and the...
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