Question
2 part question, please show your work for answer. [Part 1]You own 300 shares of Abco, Inc. stock. The company has stated that it plans
2 part question, please show your work for answer.
[Part 1]You own 300 shares of Abco, Inc. stock. The company has stated that it plans on issuing a dividend of $.60 a share one year from today and then issuing a final liquidating dividend of $2.20 a share two years from today. Your required rate of return is 9%. Ignoring taxes, what is the value of one share of this stock today?
A.) $2.36 B.) $2.40 C.) $2.62 D.) $2.80
[Part 2] Suppose you prefer to receive equal amounts of money in each of the next two years . How many shares of Abco, Inc. stock do you need to sell in year 1? (Choose the nearest number).
A.) 96 shares B.) 114 shares C.) 132 shares D.) 150 shares Please show your work.
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