You are considering acquiring a common stock that you would like to hold for one year.You expect to receive both $1.25 in dividends and $32 from the sale of the stock at the end of the year.The maximum price you would pay for the stock today is _____ if you wanted to earn a 10% return.
A)$30.23
B)$24.11
C)$26.52
D)$27.50
E)None of the options

Question

Quizplus · Accepted Answer

.10 = (32 - P + 1.25)/P; .10P = 32 - P + 1.25; 1.10P = 33.25; P = 30.23.

You Are Considering Acquiring a Common Stock That You Would