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28-04-2020
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The Red Bud Co. pays a constant dividend of $2.00 a share. The company announced today that it will continue to do this for another 2 years after which time they will discontinue paying dividends permanently. What is one share of this stock worth today if the required rate of return is 7.6 percent?

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alizaybhatti43 alizaybhatti43

29-04-2020

Answer:

Share of this stock worth today if the required rate of return is 7.6 percent is $3.59

Explanation:

stock worth today = 2/1.076 + 2/1.076^2

stock worth today = $ 3.59

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