You are considering a share of Edie\'s common stock. You expect to sell it at th

Question

You are considering a share of Edie's common stock. You expect to sell it at the end of one year for $32.00. You will also receive a divided of $2.50 at the end of the year. Edie just paid a dividend of $$2.25. If your required return on this stock is 12%, what is the most you should pay for it? You are considering a share of Edie's common stock. You expect to sell it at the end of one year for $32.00. You will also receive a divided of $2.50 at the end of the year. Edie just paid a dividend of $$2.25. If your required return on this stock is 12%, what is the most you should pay for it?

Explanation / Answer

current value = (32+2.5)/1.12= $30.80

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