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Homework answers / question archive / you expected k street co's trade at $100 per share right after paying a $2 dividend per share in one year
you expected k street co's trade at $100 per share right after paying a $2 dividend per share in one year. What is the most you would pay to buy the stock now if you want to earn at least a 15% return?
Answer : $ 86.96
Future value of the share in one year = $ 100
Present value of the share = $ 100 / 1.15 = $ 86.956