You are considering acquiring a common stock that you would like to hold for one year.You expect to receive both $0.75 in dividends and $16 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 12% return.
A)$23.91
B)$14.96
C)$26.52
D)$27.50
E)None of the options

Question

Quizplus · Accepted Answer

.12 = (16 - P + 0.75)/P; .12P = 16 - P + 0.75; 1.12P = 16.75; P = 14.96.

You Are Considering Acquiring a Common Stock That You Would