Homework answers / question archive / Suppose you are considering buying an IKEA stock this year

Suppose you are considering buying an IKEA stock this year

Economics

Share With

Suppose you are considering buying an IKEA stock this year. You know that an IKEA stock pays a dividend of $10 next year and you know you can sell it then for $5. You can always invest your money in a bank account for 2% return instead of buying stock. How much should you buy the stock for this year(that is, the maximum price)? Explain your reasoning.