Pfender Guitars has a current annual cash dividend policy of $6.00. The price of the stock is set to yield a return of 7%. What is the price of this stock if the dividend will be paid a. for 8 years and then the comapny repurchases the stock for $35? b. for 14 years and then the comapny repurchases the stock for $35? c. for 40 years and then the comapny repurchases the stock for $35? d. for 60 years and then the comapny repurchases the stock for $35? e. for 100 years and then the comapny repurchases the stock for $35? f. forever with no repurchase of the stock?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Pfender Guitars has a current annual cash dividend policy of $6.00. The price of the stock is set to yield a return of 7%. What is the price of this stock if the dividend will be paid
a. for 8 years and then the comapny repurchases the stock for $35?
b. for 14 years and then the comapny repurchases the stock for $35?
c. for 40 years and then the comapny repurchases the stock for $35?
d. for 60 years and then the comapny repurchases the stock for $35?
e. for 100 years and then the comapny repurchases the stock for $35?
f. forever with no repurchase of the stock?
Transcribed Image Text:Pfender Guitars has a current annual cash dividend policy of $6.00. The price of the stock is set to yield a return of 7%. What is the price of this stock if the dividend will be paid a. for 8 years and then the comapny repurchases the stock for $35? b. for 14 years and then the comapny repurchases the stock for $35? c. for 40 years and then the comapny repurchases the stock for $35? d. for 60 years and then the comapny repurchases the stock for $35? e. for 100 years and then the comapny repurchases the stock for $35? f. forever with no repurchase of the stock?
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