Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Pfender Guitars has a current annual cash dividend policy of $ 4 . 0 0 . The price of the stock is set to yield

Pfender Guitars has a current annual cash dividend policy of $4.00. The price of the stock is set to yield a return of 10%. What is the price of this stock if the dividend will be paid
a. for 8 years and then the comapny repurchases the stock for $25?
b. for 15 years and then the comapny repurchases the stock for $25?
c. for 40 years and then the comapny repurchases the stock for $25?
d. for 60 years and then the comapny repurchases the stock for $25?
e. for 100 years and then the comapny repurchases the stock for $25?
f. forever with no repurchase of the stock?
a. What is the price of this stock if the dividend will be paid for 8 years and then the comapny repurchases the stock for $25?
$ (Round to the nearest cent.)
b. What is the price of this stock if the dividend will be paid for 15 years and then the comapny repurchases the stock for $25?
$
(Round to the nearest cent.)
c. What is the price of this stock if the dividend will be paid for 40 years and then the comapny repurchases the stock for $25?
$
(Round to the nearest cent.)
d. What is the price of this stock if the dividend will be paid for 60 years and then the comapny repurchases the stock for $25?
$ (Round to the nearest cent)
e. What is the price of this stock if the dividend will be paid for 100 years and then the comapny repurchases the stock for $25?
$ (Round to the nearest cent.)
f. What is the price of this stock if the dividend will be paid forever with no repurchase of the stock?
$
(Round to the nearest cent.)
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Behavioral Finance And Asset Prices

Authors: David Bourghelle, Pascal Grandin, Fredj Jawadi, Philippe Rozin

1st Edition

3031244850, 978-3031244858

More Books

Students also viewed these Finance questions