Question
you own 3000 shares of stock in a firm. you receive $3 per share dividend in one year. in 2 years, the firm will liquidating
you own 3000 shares of stock in a firm. you receive $3 per share dividend in one year. in 2 years, the firm will liquidating dividend of $50 per share. the required return on the companys stock is 15 percent. ignore taxes, transaction costs and other imperfection.
A. Find the current share price of the stock
B. If you would rather equal dividend on each of the next two years, show how you can achieve this by creating homemade dividends. what is the amount of cash flow you would receive from your strategy in the second year?
C. Suppose you want only $4000 total in dividends the first year. what will your homemade dividend be in two years?
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