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Natasha2012 [34]
3 years ago
14

Beaksley, Inc. is a very cyclical type of business which is reflected in its dividend policy. The firm pays a $2.00 a share divi

dend every other year with a payment being paid today. Five years from now, the company is repurchasing all of the outstanding shares at a price of $50 a share. What is the current value of one share at a discount rate of 12 percent?
Business
1 answer:
taurus [48]3 years ago
3 0

Answer:

$31.24 is the current value of one share at a discount rate of 12 percent

Explanation:

Price today = [PVF 12%, 2 *d2]+[PVF12%,4 ] + [PVF 12%, 5 * P]

             =[.79719* 2 ] +[.63552*2] + [ .56743*50]

             = 1.5944+ 1.2710+ 28.37

             = 31.24

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