You own $100,000 worth of Smart Money stock One year from now, you will receive a dividend of $2 25 per share You will receive a $2 40 dividend two years from now You will sell the stock for $65 per share three years from now Dividends are taxed at the rate of 28 percent Assume there is no capital ...

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You own $100,000 worth of Smart Money stock. One year from now, you will receive a dividend

Question:

You own $100,000 worth of Smart Money stock. One year from now, you will receive a of $2.25 per share. You will receive a $2.40 two years from now. You will sell the stock for $65 per share three years from now. Dividends are taxed at the rate of 28 percent. Assume there is no capital gains tax. The aftertax required rate of return is 15 percent. How many shares of stock do you own?

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...