Problem
You are considering the purchase of a common share of Opco Inc. This is a short-term Investment, as your investment timeline is 1 year.
Your analysis leads you to conclude the following:
The share will sell at $100.00 at the end of Year I;
While there is no fixed dividend rate attached to the share, you expect the share will
pay a Dividend of $2.5/share at the end of Year I, and,
A rate of 6% IS a proper discount rate to be utilized in evaluating the share.
Required: Given the above information, how much would you be willing to buy?