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You own 1,000 shares of stock in Moonlight Corp. You will receive a $.80 per share dividend in one year. In two years, Moonlight will
You own 1,000 shares of stock in Moonlight Corp. You will receive a $.80 per share dividend in one year. In two years, Moonlight will pay a liquidating dividend of $45 per share. The required return on Moonlight stock is 10 percent. a. What is the current share price of your stock (ignoring taxes)? 5 points b. If you would rather have equal dividends in each of the next two years by creating homemade dividends, what would be the cash flow for Year 1 and Year 2?8 points
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