Question
Pelican Corporation will pay a dividend of $1.75 per share at this year's end and a dividend of $2.35 per share at the end of
Pelican Corporation will pay a dividend of $1.75 per share at this year's end and a dividend of $2.35 per share at the end of next year. It is expected that the price of Pelican stock will be $41 per share after two years. If Pelican has an equity cost of capital of 9%, what is the maximum price that a prudent investor would be willing to pay for a share of Pelican stock today?
| a. | $32.38 / share | |
| b. | $39.99 / share | |
| c. | $36.19 / share | |
| d. | $38.09 / share |
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Contemporary Financial Management
Authors: R. Charles Moyer, James R. McGuigan, William J. Kretlow
11th Edition
0324653506, 978-0324653502
