You own 1,000 shares of stock in Avondale Corporation. You will receive a $2.30 per-share dividend in one year. In two years, Avondale will pay a liquidating dividend of $53 per share. The required...


You own 1,000 shares of stock in Avondale Corporation. You will receive a $2.30 per-share dividend in one year. In two years, Avondale will pay a liquidating dividend of $53 per share. The required return on Avondale stock is 15 percent. What is the current share price of your stock (ignoring taxes) ? If you would rather have equal dividends in each of the next two years, show how you can accomplish this by creating homemade dividends.
Hint : Dividends will be in the form of an annuity



Thanks :)



Jun 07, 2022
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