Question
Please show all work. You are considering purchasing a stock. You expect that the stock will pay dividends at the end of years 1 through
Please show all work.
You are considering purchasing a stock. You expect that the stock will pay dividends at the end of years 1 through 5 in the amounts of $5.00, $7.00, $9.00, $11.00 and $13.00 respectively. In year six you expect the firm will wind up its affairs, liquidate the assets of the company then distribute the net liquidation proceeds to the shareholders. You expect this liquidation to result in distributions of $38.00.per share. This is a relatively risky investment, so you conclude that a 21.25% rate of return is required. Based on this information, what is the maximum you would pay to acquire this stock?
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