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A firm pays quarterly dividends. Suppose the 4 dividends in year 1 are all $1. The 4 dividends in year 2 are all $1.1. The
A firm pays quarterly dividends. Suppose the 4 dividends in year 1 are all $1. The 4 dividends in year 2 are all $1.1. The 4 dividends in year n are 1.1^(n-1). The next dividend is 3 months away. What is the value of the firm if we require 20% (APR, quarterly) discount rate? (Hint: break down the sum to 4 geometric series)
37.32 | ||
39.18 | ||
38.63 | ||
40.56 |
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