What is the maximum you would be willing to pay

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1) Suppose you are thinking of purchasing the stock of ABC Widget, Inc. You expect it to pay a $3.00 dividend in one year. You believe you can sell the stock for $21.00 at that time. You require a return of 15% on investments of this risk. What is the maximum you would be willing to pay?

2) Suppose you are thinking of purchasing the stock of ABC Widget, Inc. In addition to the dividend and price from year one you expect it to pay a $3.30 dividend in two years. You believe you can sell the stock for $23.10 at that time. You require a return of 15% on investments of this risk. What is the maximum you would be willing to pay?

Reference no: EM132804286

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