You want to purchase common stock of ValleyMax Corporation and hold it for 1 year. ValleyMax...

You want to purchase common stock of ValleyMax Corporation and hold it for 1 year. ValleyMax has announced dividends of $1.65 for the next year. Based on your analysis, you expect to sell the stock for $25 per share at the end of the year. What is the maximum price that you would pay for a share today if you wanted to earn a 11% return? $22.52 $24.01 $29.94 $23.72

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Expert Solution

maximum price that you would pay for a share today is $24.01
Statemnet showing Current Price
Particulars	Time	PVf 11%	Amount	PV
Cash inflows (Dividend)	1.00	0.9009	1.65	1.49
Cash inflows (Price)	1.00	0.9009	25.00	22.52
Current Price of Stock				24.01

jeff jeffy answered 1 year ago

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