Valorous Corporation will pay a dividend of $1.85 per share at thisyear's end and a dividend of
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Question:
Valorous Corporation will pay a dividend of $1.85 per share at thisyear's end and a dividend of $2.40 per share at the end of next year. It is expected that the price ofValorous' stock will be $43 per share after two years. If Valorous has an equity cost of capital of 8%, what is the maximum price that a prudent investor would be willing to pay for a share of Valorous stocktoday?
A.
$42.67
B.
$40.64
C.
$34.54
D.
Expert Answer:
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