Common stock value—Constant growth Over the past 6 years, Elk County Telephone has paid the dividends shown in the following table. The firm's dividend per share in 2020 is expected to be $4.02.
a. If you can earn 12% on similar-risk investments, what is the most you would be willing to pay per share in 2019, just after the $3.83 dividend?
b. If you can earn only 9% on similar-risk investments, what is the most you would be willing to pay per share?
c. Compare your findings in parts a and b, what is the impact of changing risk on share value?
a. If you can earn 12% on similar-risk investments, the most you would be willing to pay per share is $1. (Round to the nearest cent.)