Your another friend, Joe, thinks that the company will adopt an odd dividend policy. He believes that the company will pay $2 dividend per share in every odd number of years (i. e. 1, 3, 5, 7, 9 ...), and $5 dividend per share in every even number of years (i. e. 2, 4, 6, 8, 10...); that is, the dividend pattern in the following years will be $2, $5, $2, $5, $2, $5 ... onwards. Using a more sophisticated financial modelling technique, based on a 10% required rate of return, both of you agreed that the stock price today should be $34.29 per share.
However, due to the recent economic downturn. the senior management of the company intends to reduce the dividend payments by $1 per share every year indefinitely. Assume all your anticipation about the company’s dividend payout pattern, and above estimated stock price ($34.29 per share) are correct, how much you are willing to pay per share today based on this new information of cutting the dividend payout?