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Accounting

Problem:

Valorous Corporation will pay a dividend of $1.80 per share at this year's end and a divdend of $2.40 per share at the end of next year. It is expected that the price of Valorous' stock will be $44 per share after two years.

Required:

Question: If valorous has an equity cost of capital of 8%, what is the maximum price that a prudent investor would be willing to pay for a share of Valorous stock today?

a) 41.45
b) 42.40
c) 39.27
d) 40.22

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91169752

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