A financial asset delivers a dividend of £2 per share in the first four years, and £2.5 each year after that for the following three years. If the annual interest rate is 396, then present value of this flow of dividends is approximately equal to:

A financial asset delivers a dividend of £2 per share in the first four years, and £2.5 each year after that for the following three years. If the annual interest rate is 396, then present value of this flow of dividends is approximately equal to:

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 17P

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Question

Hello can you please help me with this econ question?

A financial asset delivers a dividend of £2 per share in the first four years, and £2.5 each year after that for the following three years. If the annual interest rate is 3%, then
present value of this flow of dividends is approximately equal to:
O A. 16.992
O B. 15.0823
O C. 13.7172
O D. 11.7589

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