A perfect capital market, Firm A with 100 shares outstanding. Two-period game: Time 1 cash flow $110, Time 2 liquidation value $242. 10% required rate of return. One possible dividend policy is to payout all the cash flow when the firm receives it. Whats the total value of the firm? What is the share price?

Suppose stockholders prefer a $200 dividend at date 1. In order to pay this amount, the firm could sell $90 worth of new stock at years end and pay out a total of $200. What dividend would be paid to the old stockholders at date 2? Whats the present value for old stockholders?