Discontinue paying dividends permanently

Assignment Help Financial Management

Reference no: EM131353050

1. The Red Bud Co. pays a constant dividend of $3.20 a share. The company announced today that it will continue to do this for another 2 years after which time they will discontinue paying dividends permanently. What is one share of this stock worth today if the required rate of return is 8.8 percent?

A. $8.84

B. $3.63

C. $6.40

D. $3.48

E. $5.64

2. You are scheduled to receive $28,000 in two years. When you receive it, you will invest it for 9 more years at 8.0 percent per year. How much will you have in 11 years?

A $33,663.40

B $58,770.74

C $55,972.13

D $65,285.89

E $53,173.52

Reference no: EM131353050

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