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You own 1,100 shares of stock in Avondale Corporation. You will receive a $2.00 per share...

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Finance

You own 1,100 shares of stock in Avondale Corporation. You willreceive a $2.00 per share dividend in one year. In two years, thecompany will pay a liquidating dividend of $48 per share. Therequired return on the company's stock is 20 percent. a. Ignoringtaxes, what is the current share price of your stock? (Do not roundintermediate calculations and round your answer to 2 decimalplaces, e.g., 32.16.) b. If you would rather have equal dividendsin each of the next two years, how many shares would you sell inone year? (Do not round intermediate calculations and round youranswer to 2 decimal places, e.g., 32.16.) c. What would your cashflow be for each year for the next two years? Hint: Dividends willbe in the form of an annuity.

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Solutiona The current share price of stock is the presentvalue of dividend and liquidated    See Answer
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