A corporation is scheduled to produce a line of products for the next ten years and then go out of business. The firm will pay an annual dividend of $1.75 for only those ten years. What is the present value of a share for this company if we want an 8% annual return on the stock?

= Dividend in year 1 / ( 1 + required rate of return )1 + Dividend in year 2 / ( 1 + required rate of return )2 + Dividend in year 3 / ( 1 + required rate of return )3 + Dividend in year 4 / ( 1 + required rate of return )4 + Dividend in year 5 / ( 1 + required rate of return )5 + Dividend in year 6 / ( 1 + required rate of return )6 + Dividend in year 7 / ( 1 + required rate of return )7 + Dividend in year 8 / ( 1 + required rate of return )8 + Dividend in year 9 / ( 1 + required rate of return )9 + Dividend in year 10 / ( 1 + required rate of return )10

[tex]\begin{aligned}&=\$ 1.75 / 1.081+\$ 1.75 / 1.08^{2}+\$ 1.75 / 1.08^{3}+\$ 1.75 / 1.08^{4}+\$ 1.75 / 1.08^{5}+\$ 1.751\\&1.08^{6}+\$ 1.75 / 1.087+\$ 1.75 / 1.08^{8}+\$ 1.75 / 1.08^{9}+\$ 1.75 / 1.08^{10}\end{aligned}[/tex]

= $11.74 approximately

A corporation is scheduled to produce a line of products for the next ten years and then go out of business. The firm will pay an annual dividend of​ $1.75 for only those ten years. What is the present value of a share for this company if we want an​ 8% annual return on the​ stock?

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A corporation is scheduled to produce a line of products for the next ten years and then go out of business. The firm will pay an annual dividend of $1.75 for only those ten years. What is the present value of a share for this company if we want an 8% annual return on the stock?