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JJ Industries will pay a regular dividend of $2.4 per share for each of the next...

JJ Industries will pay a regular dividend of $2.4 per share for each of the next four years. At the end of the four years, the company will also pay out a liquidating dividend of $74 per share, and the company will cease operations. If the discount rate is 13 percent, what is the current value of the company’s stock?

(Do not round intermediate calculations. Round your answer to 2 decimal places.)

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Expert Solution

Discount rate 13.0000%
Cash flows Year Discounted CF= cash flows/(1+rate)^year Cumulative cash flow
                             -   0                                            -                                           -  
                      2.400 1                                        2.12                                    2.12
                      2.400 2                                        1.88                                    4.00
                      2.400 3                                        1.66                                    5.67
                      2.400 4                                        1.47                                    7.14
                    74.000 4                                     45.39                                  52.52

Value of company stock = 52.52

jeff jeffy answered 2 years ago
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