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Asonia Co. will pay a dividend of $4.70, $8.80, $11.65, and $13.40 per share for each...

Asonia Co. will pay a dividend of $4.70, $8.80, $11.65, 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 11.1 percent on the company's stock, what is the stock price?

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Answer #1

Current price=Future dividends*Present value of discounting factor(rate%,time period)

=4.7/1.111+8.8/1.111^2+11.65/1.111^3+13.4/1.111^4

which is equal to

=$28.65(Approx).

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