The Red Bud Co. pays a constant dividend of $2.00 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.
Required:
What is one share of this stock worth today if the required rate of return is 7.6 percent?
- $4.00
- $2.23
- $5.59
- $3.59
- $2.15
Note: Please show how to work it out.