Firm pays dividend in one year to justify current? price

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Reference no: EM131997762

1. Assume? Evco, Inc., has a current stock price of $56 and will pay a $2.25 dividend in one? year; its equity cost of capital is 19%. What price must you expect Evco stock to sell for immediately after the firm pays the dividend in one year to justify its current? price? The expected price is $ ----------. (Round to the nearest? cent.)

2) Which do you? prefer: a bank account that pays 8% per year? (EAR) for three years? or:

a. An account that pays 4% every six months for three? years?

b. An account that pays 12% every 18 months for three? years?

c. An account that pays 0.8% per month for three? years?

a. An account that pays 4% every six months for three? years? If you deposit $1 into a bank account that pays 8% per year for three? years, you will have ?$ ----------------. (Round to five decimal? places.)

Reference no: EM131997762

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