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What is the current price for abc Inc. common stock if the stock is expected to...

What is the current price for abc Inc. common stock if the stock is expected to pay a dividend of $1.00 in one year, $1.40 in two years and $1.90 in three years, assuming you will sell the sock in three years for $90.39 (just after you receive the third dividend) and the required rate of return is 8%

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Expert Solution

Current price=Future dividend and value*Present value of discounting factor(rate%,time period)

=1/1.08+1.4/1.08^2+1.9/1.08^3+90.39/1.08^3

which is equal to

=$75.39(Approx)

jeff jeffy answered 2 years ago
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