Arcs and Triangles is planning on paying $1.52, $1.58, and $1.60 a share over the next...
Arcs and Triangles is planning on paying $1.52, $1.58, and $1.60 a share over the next three years, respectively. After that, the company’s stock can be sold for $52 per share. What is the market price of this stock if the market rate of return is 12 percent?
Homework Answers
rate positively ..
| Market price is the present value of future cash flow | |||||||
| i | ii | iii | iv | v=iii*iv | |||
| year | Dividend | Sales price | Total cash flow | PVIF @ 12% | present value | ||
| 1 | 1.52 | 1.52 | 0.892857143 | 1.36 | |||
| 2 | 1.58 | 1.58 | 0.797193878 | 1.26 | |||
| 3 | 1.6 | 52 | 53.6 | 0.711780248 | 38.15 | ||
| 40.77 | |||||||
| Ans = | 40.77 | ||||||
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