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Your favorite company has a plan to pay dividends of $5.35, $9.45 and $12.65 in years 1, 2 and 3. Then, bad news, your company will be ceasing to exist and close down forever. As an investor, 9.3% caputures the risk of the investment. What should the price per share of this company be

Respuesta :

Tundexi

Answer:

$22.50

Explanation:

Required return = 9.30%

Years  Dividends   PVF at 9.3%   PV of dividend

1              5.35         0.91491308     4.894784995

2             9.45         0.83706595    7.910273227

3            12.65         0.76584258    9.687908752

Stock price                                      22.49296697

Price per share of the company = $22.49296697

Price per share of the company = $22.50

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