The Coal Bin is in a downsizing mode. The company paid a P1.40 annual dividend last year. The company has announced plans to lower the dividend by P.20 a year. Once the dividend amount becomes zero, the company will cease all dividends and go out of business. You have a required rate of return of 18 percent on this particular stock given the company's situation. What is the minimum price you would like to receive if you were to sell your shares in this firm today? a. P1.54 b. P2.78 c. P0.70 d. P3.87

The Coal Bin is in a downsizing mode. The company paid a P1.40 annual dividend last year. The company has announced plans to lower the dividend by P.20 a year. Once the dividend amount becomes zero, the company will cease all dividends and go out of business. You have a required rate of return of 18 percent on this particular stock given the company's situation. What is the minimum price you would like to receive if you were to sell your shares in this firm today? a. P1.54 b. P2.78 c. P0.70 d. P3.87

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 22P

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