Problem:
Gen Corp. is expected to pay a dividend of $3.40 per year indefinitely. The appropriate rate of return on this stock is 10 percent per year, and the stock consistently goes ex-dividend 30 days before dividend payment date.
Required:
Question 1: What will be the expected minimum price in light of the dividend payment logistics?
Question 2: What will be the expected maximum price in light of the dividend payment logistics?
Note: Be sure to show how you arrived at your answer.