Planned Obsolescence has a product that will be in vogue for 3 years, at which point...
Planned Obsolescence has a product that will be in vogue for 3 years, at which point the firm will close up shop and liquidate the assets. As a result, forecast dividends are DIV1 = $11.50, DIV2 = $12.00, and DIV3 = $27.50.
What is the stock price if the discount rate is 11%? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Homework Answers
Current price=Present value of future dividends
=11.5/(1+11%)^1+12/(1+11%)^2+27.6/(1+11%)^3
=10.36036036+9.739469199+20.18088212
=40.28
Stock price=$40.28
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Planned Obsolescence has a product that will be in vogue for 3
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