Question
Distressed Jeans Ltd. has announced that it will pay a $1.50 per share dividend next year and then a liquidating dividend of $20 per share.
Distressed Jeans Ltd. has announced that it will pay a $1.50 per share dividend next year and then a liquidating dividend of $20 per share. You own 50 shares in the company and wish to ensure that you receive $500 in the first year. Your required rate of return is 9%. Which of the following statement is correct?
a.
You will end up selling 23 shares approximately at the end of year 1
b.
The current stock price of the firm is approximately $13.75
c.
You will have 37 shares with you in year 2
d.
At the end of year 1, you will need to sell shares worth $500
e.
Your dividend receipt in the second year will be $1,000
help needed
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