What is the current share price of stock

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You own 1,000 shares of stock in ABC Corp. You will receive a $.80 per share dividend in one year. In two years, ABC will pay a liquidating dividend of $45 per share. The required return on ABC stock is 10 percent.

a. What is the current share price of your stock (ignoring taxes)?

b. If you would rather have equal dividends in each of the next two years by creating homemade dividends, what would be the cash flow for Year 1 and Year 2?

Reference no: EM132719892

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