Question

The Red Bud Co. pays a constant dividend of $2.40 a share. The company announced today that it will continue to do this for another 2 years after which time they will discontinue paying dividends permanently. What is one share of this stock worth today if the required rate of return is 8.0 percent

Answer 1

$4.44

Step-by-step explanation:

P0 = $2.40 / 1.08+ $2.40 / 1.08 = $4. 44