What would an investor be willing to pay for ie what is the, Ask an Expert

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What would an investor be willing to pay for, i.e. what is the present value of, common stock (is this significant to the question, why or why not?) in a firm that has no growth opportunities but pays dividends of $6.00 per year, starting today? The next dividend will be paid in exactly 1 year. The required rate of return is a stated annual rate of 12.5% compounded quarterly (do we need to convert this to an effective annual rate, EAR? Why or why not?). If the investor buys now, they will receive today’s dividend (so would the investore be willing to pay the straight PV or the PV + $6, why?).

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92055495

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