Question

In: Finance

a. Valorous Corporation will pay a dividend of $1.80 per share at this​ year's end and...

a. Valorous Corporation will pay a dividend of $1.80 per share at this​ year's end and a dividend of $2.40 per share at the end of next year. It is expected that the price of​ Valorous' stock will be $43 per share after two years. If Valorous has an equity cost of capital of 8​%, what is the maximum price that a prudent investor would be willing to pay for a share of Valorous stock​ today?

a. $42.62

b. $38.56

c. $40.59

d. $34.50

B. If the current rate of interest is 6​%, then the present value​ (PV) of an investment that pays $1,300 per year and lasts

21 years is closest​ to:

A. $15,293

B. $21,410

C. $9,176

D.$18,352

Solutions

Expert Solution

jeff jeffy answered 2 years ago
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