Assume that you plan to buy a share of National Company’s stock today and to hold it for 2 years.  Your expectations are that you will not receive a dividend at the end of Year 1, but you will receive a dividend of P7.50 at the end of  Year 2.  In addition, you expect to sell the stock for P150 at the end of Year 2.  If your expected rate of return is 15 percent, how much should you be willing to pay for this stock today?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Assume that you plan to buy a share of National Company’s stock today and to hold it for 2 years.  Your expectations are that you will not receive a dividend at the end of Year 1, but you will receive a dividend of P7.50 at the end of  Year 2.  In addition, you expect to sell the stock for P150 at the end of Year 2.  If your expected rate of return is 15 percent, how much should you be willing to pay for this stock today? Use 5 decimal places in your computation

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