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Wk12 Q8 Homemade Dividends You own 1,000 shares of stock in Avondale Corporation. You will receive a $2.30 per share dividend in one year.

Wk12 Q8 Homemade Dividends

You own 1,000 shares of stock in Avondale Corporation. You will receive a $2.30 per share dividend in one year. In two years, Avondale will pay a liquidating dividend of $53 per share. The required return on Avondale stock is 15 percent. The current share price of your stock (ignoring taxes) is $___ . If you would rather have equal dividends in each of the next two years, show how you can accomplish this by creating homemade dividends. (Hint: Dividends will be in the form of an annuity.) The dividend amount will be $___ . (Do not include the dollar signs ($). Round your answers to 2 decimal places. (e.g., 32.16))

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