What would you be willing to pay (given that you could live forever, and hence could receive all the 1 answer below »

What would you be willing to pay (given that you could live forever, and hence could receive all the cash flows) for a preferred share of stock in the University of Pittsburgh, that promises you to pay a cash dividend to you at the end of the year of $25, which will increase every year by 1%, forever. The interest rate is fixed at 4.75%. What would you be willing to pay if the share of stock paid out its first $25 right now, and everything else being the same?

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