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Author Question: Ted has 10 shares of Grand Company. Based on the company's dividend policy, Ted will receive a total ... (Read 106 times)

mpobi80

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on: Jul 10, 2018
Ted has 10 shares of Grand Company. Based on the company's dividend policy, Ted will receive a total of 450 a year in perpetuity. What is the value of each share if the rate of interest is 8 percent?
 
  What will be an ideal response?

Question 2

For a given constant required rate of return, the greatest portion of a preferred stockholder's return
  comes from increases in the price of preferred stock.
 
  Indicate whether the statement is true or false
Foundations of Finance ¦ Keown, Petty, Martin ¦ 9th Edition
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kalskdjl1212

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Reply #1 on: Jul 10, 2018
Answer to Question 1

Dividend per share = 450 / 10 = 45
P = D / r = 45 / 0.08 = 562.50

Answer to Question 2

FALSE


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