Problem:
You are considering the purchase of a share of Blue Grass, inc. common stock. You expect to sell it at the end of one year for $87 a share. You will also receive a dividend of $5.36 per share at the end of the next year. If your required return on this stock is 7.39%,
Required:
Question 1: What is the most you would be willing to pay for Blue Grass, Inc common stock now? Explain comprehensively and also provide formulas and calculations.