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You own 1,000 shares of stock in Avondale Corporation. You will receive $3.115 per share cash...

You own 1,000 shares of stock in Avondale Corporation. You will receive $3.115 per share cash dividend in one year. In two years, the company will pay a liquidating dividend of $57 per share. The required return on the company’s stock is 15 percent. What is the current price of your stock? (Ignore taxes). If you would rather have equal dividends in each of the next two years, show how you can accomplish this by creating homemade dividends (Hint: dividends will be in a form of annuity).

Please show work!

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SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

ALL WORK WITH SIMPLE CALCULATION. NO EXCEL FUNCTION IS USED. JUST SIMPLE MATHEMATICAL CALCULATIONS

jeff jeffy answered 1 year ago
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