Question

Assume Evco, Inc., has a current stock price of $39 and will pay a $1.80 dividend in one year; its equity cost of capital is 13%. 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.)

Step 1

**Calculation of Expected Price:**

Step 2

With the current price of $39, the company can anticipate to sell its stock for $42.27 ...

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