New Products pays no dividend at the present time. Starting in Year 3, the firm will pay a $.25 dividend per share for two years. After that, the company plans on paying a constant $.75 a share annual dividend indefinitely. How much should you pay per share to purchase this stock today at a required return of 13.8 percent

price of Share today = $3.56

Explanation:

given data

pay a dividend per share = $.25

annual dividend indefinitely = $.75

required return k4 = 13.8 percent

solution

we know that required return is express as

required return  = (annual dividend ÷ present value) + growth

here g is 0

so

0.138 = 0.75 ÷ P4

so P4 = 5.43

and at starting

Po =  

Po =

Po = $3.24

so here dividend of 0.25 in 3 and 4 year will be here as

= \frac{0.25}{0.138^3} + \frac{0.25}{0.138^4}

= $0.32  

so here price of Share today is

price of Share today =  $3.24 + $0.32

price of Share today = $3.56

first one

explanation:

the correct answer is economics is a game without winners or losers.

unlike sports or games economic is a game without losers or winner rather it is a game where everyone wins. parties of business doing businesses exchange money with each other and hence exchange is done on the basis of goods. one party takes the goods and other sales it so there is winner on both sides. each party values more highly the good it gets than the good it gives up. both sides exchange only because both intend to increase their value. so there is no concept of lose or win.