Phender Guitars has a current cash dividend policy of $6.00. The price of the st

Question

Phender Guitars has a current cash dividend policy of $6.00. The price of the stock is set to yield a return of 10%. What is the price of this stock if the dividend will be paid for 9rs and then a liquidating or final dividend of $25?

I understand how to get the price using the normal equation, what is confusing me is the $25 final dividend. Below I have placed the equation as I understand it, and my question is whether or not it is correct to do it that way. If its incorrect would someone please provide me with the correct equation.

Price=6.00x (1-1/((1+0.10)^9+25))/0.10

Explanation / Answer

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