Pfender Guitars has a current annual cash dividend policy of $6.00. The price of the stock is set to yield a return of 7%. What is the price of this stock if the dividend will be paid a. for 8 years and then the comapny repurchases the stock for $35? b. for 14 years and then the comapny repurchases the stock for $35? c. for 40 years and then the comapny repurchases the stock for $35? d. for 60 years and then the comapny repurchases the stock for $35? e. for 100 years and then the comapny repurchases the stock for $35? f. forever with no repurchase of the stock?
Pfender Guitars has a current annual cash dividend policy of $6.00. The price of the stock is set to yield a return of 7%. What is the price of this stock if the dividend will be paid a. for 8 years and then the comapny repurchases the stock for $35? b. for 14 years and then the comapny repurchases the stock for $35? c. for 40 years and then the comapny repurchases the stock for $35? d. for 60 years and then the comapny repurchases the stock for $35? e. for 100 years and then the comapny repurchases the stock for $35? f. forever with no repurchase of the stock?
Chapter7: Stocks (equity) - Characterstics And Valuation
Section: Chapter Questions
Problem 16PROB
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