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You are thinking of purchasing the stock of Ajax co. You expect it to pay a $1.2 dividend in one year, and you believe that
You are thinking of purchasing the stock of Ajax co. You expect it to pay a $1.2 dividend in one year, and you believe that you can sell the stock for $22 at that time.
a) If you require a return of 15% on investments of this risk, what is the maximum you would be willing to pay?
b) If you decide to hold the stock for two years, how much would you be willing to pay?
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