You own 2,000 shares of stock in Avondale Corp. You will receive a $0.85 per share dividend in one year. In two years, Avondale will pay a liquidating dividend of $43 per share. The required return on Avondale stock is 10 percent. (Do not round intermediate calculations. Round the final answers to 2 decimal places. Omit $ sign in your response.) What is the current share price of your stock (ignoring taxes)? Share price $ If you would rather have equal dividends in each of the next two years by creating homemade dividends, what would be the cash flow for Year 1 and Year 2? Year 1 cash flow Year 2 cash flow $ $
You own 2,000 shares of stock in Avondale Corp. You will receive a $0.85 per share dividend in one year. In two years, Avondale will pay a liquidating dividend of $43 per share. The required return on Avondale stock is 10 percent. (Do not round intermediate calculations. Round the final answers to 2 decimal places. Omit $ sign in your response.) What is the current share price of your stock (ignoring taxes)? Share price $ If you would rather have equal dividends in each of the next two years by creating homemade dividends, what would be the cash flow for Year 1 and Year 2? Year 1 cash flow Year 2 cash flow $ $
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:You own 2,000 shares of stock in Avondale Corp. You will receive a $0.85 per share dividend in one year. In two years, Avondale will
pay a liquidating dividend of $43 per share. The required return on Avondale stock is 10 percent. (Do not round intermediate
calculations. Round the final answers to 2 decimal places. Omit $ sign in your response.)
What is the current share price of your stock (ignoring taxes)?
Share price
If you would rather have equal dividends in each of the next two years by creating homemade dividends, what would be the cash flow
for Year 1 and Year 2?
$
Year 1 cash flow
Year 2 cash flow
$
$
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