Knightmare, Inc., will pay a dividend of $6.55, $10.65, and$13.85 per share for each of the next three years, respectively. The company will then close its doors. Investors require a return of 9.8 percent on the company's stock. What is the current stock price? $25.26 , $31.49, $30.02, $27.88, $36.20
Current price=Future dividends*Present value of discounting factor(rate%,time period)
=6.55/1.098+10.65/1.098^2+13.85/1.098^3
which is equal to
=$25.26(Approx).
Knightmare, Inc., will pay a dividend of $6.55, $10.65, and$13.85 per share for each of the...