Please use the following information for questions 1-4 (be careful about rounding).
Stock A pays a dividend of $3 per share next year. The discount rate is 10%.
1. If you hold the stock for one year, what is the price for stock A you have to pay now (P0) ?
A) $30
B) $33
C) $36
D) $ 35
E) None of the above
2. If you hold the stock for two years, what is the price for stock A you have to pay now (P0)?
A) $30
B) $33
C) $35
D) $40
E) None of the above
3. If you hold the stock for three years, what would be the price for stock A three years from now (P3)?
A) $39
B) $33
C) $36
D) $ 30
E) None of the above
4. If you hold the stock for two years, what would be the price for stock A two years from now (P2)?
A) $30
B) $33
C) $36
D) $35
E) None of the above