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Today, 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
Today, 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 $40 per share. The required return on Avondale stock is 15 percent. a. What is the current share price of stock Avondale? b. What is the expected stock price at the beginning of year two? c. Suppose you want only $200 total in dividends the first year. What will your dividends be in year two? What will be the present value of total dividends in two years?
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