A company will pay a $2 per share dividend in one year and a final liquidating...

 

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A company will pay a $2 per share dividend in one year and a final liquidating dividend of $15 per share in two years. The required return on the company's stock is 12%. a) Assume that you own 100 shares of the company's stock. If you want $100 total in dividends the first year, what will your cash flow from homemade dividends be at the end of year two? b) Assume you own 100 shares of the company's stock. If you want $3 per share dividend in one year, what will your cash flow from homemade dividends be at the end of year two? A company will pay a $2 per share dividend in one year and a final liquidating dividend of $15 per share in two years. The required return on the company's stock is 12%. a) Assume that you own 100 shares of the company's stock. If you want $100 total in dividends the first year, what will your cash flow from homemade dividends be at the end of year two? b) Assume you own 100 shares of the company's stock. If you want $3 per share dividend in one year, what will your cash flow from homemade dividends be at the end of year two?

Answer rating: 100% (QA)

a To receive a total of 100 in dividends in the first year you would need to receiv... View the full answer