Question: Please i need help with this question. This is a corporate finance course You own 1,000 shares of stock in ABC Corporation. You will receive
Please i need help with this question. This is a corporate finance course
You own 1,000 shares of stock in ABC Corporation. You will receive a 60 cent per share dividend in one year. In two years, ABC will pay a liquidating dividend of $30 per share. The required return on ABC stock is 15%. What is the current share price of your stock (ignoring taxes)? If you would rather have equal dividends in each of the next two years, show how you can accomplish this by creating homemade dividends. (Hint: Dividends will be in the form of an annuity.)
Suppose you want only $200 total in dividends the first year. What will your homemade dividend be in two years?
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
