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jekas [21]
3 years ago
12

Asonia Co. will pay a dividend of $4.30, $8.40, $11.25, and $13.40 per share for each of the next four years, respectively. The

company will then close its doors. If investors require a return of 9.9 percent on the company's stock, what is the stock price?
Business
1 answer:
Elan Coil [88]3 years ago
4 0

Answer:

$28.53

Explanation:

Asonia Co. stock price will be calculated using discount factor of 9.9% which is investors required rate of return for company's stock.

Stock price = dividends * (1+r)^ - n

$4.30 (1.099)^-1 + $8.40 (1.099)^-2 + $11.25 (1.099)^-3 + $13.40 (1.099)^-4

$3.91 + $6.95 + $8.48 + $9.19

$28.53

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$18,150

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Calculation for the total amount of the cash dividend

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