Respuesta :
Answer:
correct option C
Explanation:
Give data:
next four year dividend - $0.40,$0.60, $0.75 and $1.00
interest rate - 3.5%
Year Particulars Amount PVF@13.5% PV
1 Dividend 0.4 0.881 = 0.4 *0.881 = $0.3524
2 Dividend 0.60 0.7763 = 0.60 *0.7763 = $ 0.4658
3 Dividend 0.75 0.6839 = 0.5129
4 Dividend 1.00 0.6029 = 0.6026
4 Price $10.350 0.6026 = 6.2367
current value = (0.3524 + 0.4658+0.5129+0.6026+6.2367) = $8.17
PVF@13.5% for dividend 0.40
= [tex]\frac{1}{(1+13.5\%)^{year\ 1}}[/tex]
= [tex]\frac{1}{(1+13.5\%)^{1}} = 0.881[/tex]
PVF@13.5% for dividend 0.60
= [tex]\frac{1}{(1+13.5\%)^{year\ 2}}[/tex]
= [tex]\frac{1}{(1+13.5\%)^{2}} = 0.0.7763[/tex]
Price is calcualted as
= \frac{year\ 4*1.035}{13.5\% - 3.5\%}
=\frac{4*1.035}{13.5\% -3.5\%}
