Question
Consider a stock that plans to pay a fixed dividend of $5 per year for the next twenty years. After that, the company will liquidate
Consider a stock that plans to pay a fixed dividend of $5 per year for the next twenty years. After that, the company will liquidate and distribute a final cash flow of $100 per share to the shareholders. The required return on the stock is 8%.
What is the value of the stock today? [ Select ] ["$62.50", "$100.19", "$0", "70.54"]
What is the dividend yield this year? [ Select ] ["7.1%", "0%", "8%", "Impossible to determine"]
What is the value of the stock in 5 years? [ Select ] ["$100.00", "$74.32", "$70.54", "$103.65"]
What is the capital gains yield in 5 years? [ Select ] ["3.2%", "1.3%", "8%", "0%", "6.7%"]
What is the value of the stock in 30 years? [ Select ] ["$100", "$0", "Impossible to determine", "$70.54"]
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