What is the current share price of stock

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You own 1,000 shares of stock in a company. You will receive a $2.50 per share dividend in one year. In two years, the company will pay a liquidating dividend of $55 per share. The required return on its stock is 12%.

a) What is the current share price of your stock (ignoring taxes)?

b) If you would rather have equal dividends in each of the next two years, show how you can accomplish this by creating homemade dividends.

Reference no: EM132408131

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