In: Finance
Which of the following values is closest to the amount that should be paid for a stock that will pay a dividend of $10 in one year and $11 in two years? The stock will be sold in 2 years for an estimated price of $120. The appropriate discount rate is 9%. Show steps
| Year | Cash Flow | PV Factor | PV Of Cash Flow |
| a | b | c=1/1.09^a | d=b*c |
| 1 | $ 10 | 0.917431193 | $ 9.17 |
| 2 | $ 11 | 0.841679993 | $ 9.26 |
| 2 | $ 120 | 0.841679993 | $ 101.00 |
| Stock Price | $ 119.43 | ||