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How much should be willing to pay for the stock today

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Reference no: EM132775717

Problem 1: Assume that you plan to buy a share of XYZ stock today and to hold it for 2 years. Your expectations are that you will not receive a dividend at the end of Year 1, but you will receive a dividend of $9.25 at the end of Year 2. In addition, you expect to sell the stock for $150 at the end of Year 2. If your expected rate of return is 16 percent, how much should you be willing to pay for this stock today?

a. $164.19
b. $107.53
c. $118.35
d. $131.74
e. $75.29

Reference no: EM132775717

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