Problem:
Langley Enterprises pays a constant dividend of $1.30 a share. The company announced today that it will continue to do this for another 2 years after which time it will discontinue paying dividends permanently.
Requirement:
Question: What is one share of this stock worth today if the required rate of return is 7 percent?
- $3.74
- $2.12
- $2.35
- $2.60
- $3.50
Note: Explain in detail and show all computations in proper way.