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the two questions are related 15. V Homemade Dividends You own 1,000 shares of stock in Avondale Corporation. You will receive a 70 cent per
the two questions are related 15. V Homemade Dividends You own 1,000 shares of stock in Avondale Corporation. You will receive a 70 cent per share dividend in one year. In two years, Avondale will pay a liquidating dividend of SHP 40 per share. The required return on Avondale stock is 15, percent. What is the current share price of your stock (ignoring taxes)? If you would rather have equal dividends in each of the next two years, show how you can accomplish this by creating homemade divi- dends. (Hint: Dividends will be in the form of an annuity.) Homemade Dividends In the previous problem, suppose you want only SHP 200 total in dividends the first year. What will your homemade dividend be in two years? 16. ualuating an extra dividend versus a share
the two questions are related
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