You are considering acquiring a common stock that you would like to hold for one year.You expect to receive both $3.50 in dividends and $42 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)$23.91
B)$24.11
C)$26.52
D)$27.50
E)None of the options

Question

Quizplus · Accepted Answer

.10 = (42 - P + 3.50)/P; .10P = 42 - P + 3.50; 1.1P = 45.50; P = 41.36.

You Are Considering Acquiring a Common Stock That You Would