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Consider a share of stock in a company that will pay a dividend of $25...

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Finance

Consider a share of stock in a company that will pay a dividend of $25 one year from today and immediately liquidate its assets. Your expected share of the liquidated assets is $5. Your time value of money is such that you consider $1.05 a year from today is equivalent to $1.00 today. What is the maximum you would be willing to pay for a share of stock in this company? [Recall that PV t = [(DIV t+1)/(1+r) 1] + [(LIQ t+1)/(1+r) 1]

Answer: $28.57

Can I use a regular calculator to figure out?

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