1. AXY Company is expected to pay an annual dividend of $1.6 per share next year...
1. AXY Company is expected to pay an annual dividend of $1.6 per share next year and then pay a final liquidating divided of $25 per share the following year. Currently, you own 350 shares of the Golden Cage. What is the current value of your shares if the required return is 10 percent?
Homework Answers
Current price = Presnet value of future cash flows
Current price = 1.6 / (1 + 0.1)1 + 25 / (1+ 0.1)2
Current price = 1.454545 + 20.661157
Current price = 22.1157
Current value = 350 * 22.1157
Current value = $7,740.50
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