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Burnett Corp. pays a constant $23 dividend on its stock. The company will maintain this dividend...

Burnett Corp. pays a constant $23 dividend on its stock. The company will maintain this dividend for the next 6 years and will then cease paying dividends forever.

  

If the required return on this stock is 6 percent, what is the current share price?

Multiple Choice

  • $113.10

  • $118.75

  • $138.00

  • $119.88

  • $110.84

Solutions

Expert Solution

current share price $113.10
Statemnet showing Current Price
Particulars Time PVf 6% Amount PV
Cash inflows (Dividend)   1-6                  4.9173                    23.00                  113.10
Current Price of Stock                  113.10
Time PVF at 6%
                                                               1.00                        0.9434
                                                               2.00                        0.8900
                                                               3.00                        0.8396
                                                               4.00                        0.7921
                                                               5.00                        0.7473
                                                               6.00                        0.7050
PVF for 6 Years                        4.9173

jeff jeffy answered 1 year ago
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