Sharpe General Stores is declining so it has announced that it will pay annual dividends of $.80,$.50,and $.50 over the next three years,respectively.The following year,the firm will close and pay a final dividend of $13.80 a share.If you have a required return of 14.5 percent,what is one share of this stock worth to you today?

Question

Quizplus · Accepted Answer

P₀ = $.80/1.145 + $.50/1.145² + $.50/1.145³ + $13.80/1.145⁴ = $9.44

Sharpe General Stores Is Declining So It Has Announced That