A share that can be purchased for $1,285.30 will pay a quarterly dividend in perpetuity at...
A share that can be purchased for $1,285.30 will pay a quarterly dividend in perpetuity at the rate of 7.3% compounded quarterly of the purchase price. Calculate the end-of-quarter dividends.
Homework Answers
Given,
Share price today = $1285.30
Interest rate = 7.3% or 0.073
Solution :-
Quarterly interest rate = 0.073/4 = 0.01825
Now,
End-of-quarter dividends = share price today x quarterly interest rate
= $1285.30 x 0.01825 = $23.456725
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