A firm's stock pays a constant dividend of $1.46 per share. The company announced today that it will continue to pay the dividend for another 2 years and then in Year 3 it will pay a final liquidating dividend of $15.25 per share. What is one share of this stock worth today at a required return of 18.5 percent? (A liquidating dividend means the firm ceases operations after this)

EBK CFIN
6th Edition
ISBN:9781337671743
Author:BESLEY
Publisher:BESLEY
Chapter7: Stocks (equity) - Characterstics And Valuation
Section: Chapter Questions
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A firm's stock pays a constant dividend of $1.46 per share. The company announced today
that it will continue to pay the dividend for another 2 years and then in Year 3 it will pay a final
liquidating dividend of $15.25 per share. What is one share of this stock worth today at a
required return of 18.5 percent? (A liquidating dividend means the firm ceases operations after
this)
Transcribed Image Text:A firm's stock pays a constant dividend of $1.46 per share. The company announced today that it will continue to pay the dividend for another 2 years and then in Year 3 it will pay a final liquidating dividend of $15.25 per share. What is one share of this stock worth today at a required return of 18.5 percent? (A liquidating dividend means the firm ceases operations after this)
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