In the previous problem, suppose you want only $200 total in dividends the first year. What will
Question:
In the previous problem, suppose you want only $200 total in dividends the first year. What will your homemade dividend be in two years?
Data from Previous Problem
You own 1,000 shares of stock in Avondale Corporation. You will receive a $2.34 per share dividend in one year. In two years, the company will pay a liquidating dividend of $74 per share. The required return on the stock is 14 percent. What is the current share price of your stock (ignoring taxes)? If you would rather have equal dividends in each of the next two years, show how you can accomplish this by creating homemade dividends.
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Related Book For
Corporate Finance Core Principles And Applications
ISBN: 9781260571127
6th Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan
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