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The ECN Corporation is an all equity firm and its current financial manager plan to dissolve the firm in two years. The corporation has announced
The ECN Corporation is an all equity firm and its current financial manager plan to dissolve the firm in two years. The corporation has announced that it will pay $0.6 per share dividend to shareholders in one year. In two years, ECN will pay a liquidating dividend of $60 per share. The required return on ECN stock is -18%. Lily owns 10,000 shares in the company." a.- What will Lily's dividend income be this year if she uses homemade dividends to create two equal annual dividend payments (6 marks) b.- What will Lily's dividend income be in year two if she only wants $ 1,500 total in dividend in year one. (14 marks) The ECN Corporation is an all equity firm and its current financial manager plan to dissolve the firm in two years. The corporation has announced that it will pay $0.6 per share dividend to shareholders in one year. In two years, ECN will pay a liquidating dividend of $60 per share. The required return on ECN stock is -18%. Lily owns 10,000 shares in the company." a.- What will Lily's dividend income be this year if she uses homemade dividends to create two equal annual dividend payments (6 marks) b.- What will Lily's dividend income be in year two if she only wants $ 1,500 total in dividend in year one. (14 marks)
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