View the step-by-step solution to:

# 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.

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))

### Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

### -

Educational Resources
• ### -

Study Documents

Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

Browse Documents