How much should you be willing to pay for one share of stock if the company just paid a $1 dividend, you expect the dividends to increase by 5% annually, and you need a 12% return on your investment

To determine the price you should be willing to pay for one share of stock, you can use the dividend discount model (DDM). The DDM values a stock based on the present value of its expected future dividends. Here's how you can calculate it:

1. Calculate the expected dividend for the next year:
Next year's dividend = Current dividend * (1 + Growth rate)
In this case, the current dividend is $1 and the growth rate is 5%, so:
Next year's dividend = $1 * (1 + 0.05) = $1.05

2. Determine the required rate of return (discount rate) for the investment. In this case, it is 12%.

3. Use the dividend discount model formula to calculate the fair value of the stock:
Fair value = Next year's dividend / (Discount rate - Growth rate)
Fair value = $1.05 / (0.12 - 0.05) = $1.05 / 0.07 = $15

Therefore, you should be willing to pay $15 for one share of stock based on the given information.