You own 1,100 shares of stock in Avondale corporation. You will receive a $2.40 per share dividend in one year. In two years, Avondale will pay a liquidating dividend of $72 per share. The required return on Avondale stock is 20 percent.

Ignoring taxes, what is the current share price of your stock?

If you would rather have equal dividends in each of the next two years, how many shares would you sell in one year?

What would your cash flow be for each year for the next two years? (Dividend will be in form of annuity).

hapter 17 $18 Question 5 (of 6) velue: .40.00 points You own 1,100 shares of stock in Avondale Corporation. You will receive a $2.40 per share dividend in one year. In two years, Avondale will pay a liquidating dividend of $72 per share. The required return on Avondale stock is 20 percent Ignoring taxes, what is the current share price of your stock? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) Share price If you would rather have equal dividends in each of the next two years, how many shares would you sell in one year? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g. 32.16.) Number of shares What would your cash flow be for each year for the next two years? Hint Dividends will be in the form of an annuity. (Do not round intermediate calculations.) eBook & Resources