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David has $23000 dollars that it wishes to pay out as dividends, and a cost of...

David has $23000 dollars that it wishes to pay out as dividends, and a cost of equity of 0.26. If it pays out $17000 in dividends today, what dividend should they pay 1 year from today to make shareholders indifferent between this dividend scheme and one where shareholders get all of the cash today?

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Answer #1

rate positively ..

Total dividend to be given = 23000
Dividend paid today = 17000
PV of future dividend 6000
Required rate = 26%
Therefore dividend to be paid after 1 year to be indifferent = 7560
6000*(126%)
Ans = 7560
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