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Consider a Share of Stock in a Company That Will

Question 2

Multiple Choice

Consider a share of stock in a company that will pay a dividend of $25 one year from today and immediately liquidate its assets. Your expected share of the liquidated assets is $5. Your time value of money is such that you consider $1.05 a year from today is equivalent to $1.00 today. What is the maximum you would be willing to pay for a share of stock in this company?


A) $23.81
B) $28.57
C) $30.06
D) $34.76

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