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Suppose that you own 1000 shares of AMC Corp. You receive $2.50 per share dividend in year one and $60 per share in year two.
Suppose that you own 1000 shares of AMC Corp. You receive $2.50 per share dividend in year one and $60 per share in year two. The firm will be liquidating after two years. The required return on stock is 15 percent. Assume no tax. a. Compute the current share price. b. If you want $1000 total in dividends for the first year, what will your homemade dividend be in year two? c. Compute the PV of cash flow from the companys dividend payment scheme. d. Show that the PV of cash flow from your own home made dividend is equal to the PV from above.
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