Dividends will be in the form of an annuity

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Reference no: EM131495655

You own 1,000 shares of stock in Avondale Corporation. You will receive a $1.85 per share dividend in one year. In two years, Avondale will pay a liquidating dividend of $58 per share. The required return on Avondale stock is 15 percent. (a) Ignoring taxes, what is the current share price of your stock (b) If you would rather have equal dividends in each of the next two years, how many shares would you sell in one year? (c) What would your cash flow be for each year for the next two years? Hint: Dividends will be in the form of an annuity.

Reference no: EM131495655

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