Astock is expected to pay a $2 dividend in 2 years and a $3 dividend in 3 years. if you expect the price to be $75 in 3 years and if the required return is 9%, what is the stock's present value? (round to 2 decimal places. enter only numbers and decimals in your response.)

    $61,91    

Explanation:

To know the present value we apply the following formula:

Present Value  =  CF /  (1 + r)^t    

CF : Cash Flow (Dividend and price of stock)

r : Required Return (9%)

t : Year when the CF are received.

 2    3      3  Year

$ 2,00$ 3,00$ 75,00  Dividend

9,0%9,0%9,0%  Rate of Return

$1,68   $2,32   $57,91  Present Value      $61,91        

The investor receive the first dividen on Year 2 and then the third dividend on Year 3 when it sells the Stock a price of $75.

Each year it's necessary to discount the cash flow an interest rate of 9%

answer; i believe the correct answer is (180)

answer; functional fixedness;