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Valorous Corporation will pay a dividend of $1.95 per share at this year's end and a dividend of $2.50 per share at the end of next year. It is expected that the price of Valorous' stock will be $45 per share after two years. If Valorous has an equity cost of capital of 10%, what is the maximum price that a prudent investor would be willing to pay for a share of Valorous stock today? OA. $41.03 OB. $34.88 OC. $43.08 OD. $38.98 C...

Valorous Corporation will pay a dividend of $1.95 per share at this year's end and a dividend of $2.50 per share at the end of next year. It is expected that the price of Valorous' stock will be $45 per share after two years. If Valorous has an equity cost of capital of 10%, what is the maximum price that a prudent investor would be willing to pay for a share of Valorous stock today? OA. $41.03 OB. $34.88 OC. $43.08 OD. $38.98 C...

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Valorous Corporation will pay a dividend of $1.95 per share at this year's end and a dividend of $2.50 per share at the end of next year. It is expected that the price of Valorous' stock will be $45 per share after two years. If Valorous has an equity cost of capital of 10%, what is the maximum price that a prudent investor would be willing to pay for a share of Valorous stock today? OA. $41.03 B. $34.88 OC. $43.08 O D. $38.98
Transcribed Image Text:Valorous Corporation will pay a dividend of $1.95 per share at this year's end and a dividend of $2.50 per share at the end of next year. It is expected that the price of Valorous' stock will be $45 per share after two years. If Valorous has an equity cost of capital of 10%, what is the maximum price that a prudent investor would be willing to pay for a share of Valorous stock today? OA. $41.03 B. $34.88 OC. $43.08 O D. $38.98
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