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You are considering acquiring a common share of Sahali Shopping Center Corporation that you would like to hold for 1 year. You expect to receive both $1.85 in dividends and $45 from the sale of the share at the end of the year. The maximum price you would pay for a share today is __________ if you wanted to earn a 10% return.

Respuesta :

Tundexi

Answer:

$42.60

Explanation:

Current value = Future dividends and value*Present value of discounting factor(rate%,time period)

Current value =  $1.85 / (1+10%) + $45 / (1+10%)

Current value =  $1.85/1.1 + 45/1.1

Current value = $ 1.68181 + $40.91

Current value = $42.5918

Current value = $42.60

The maximum price that should be paid for the share today is $42.60.

  • The calculation is as follows:

Current value = Future dividends and value × Present value of discounting factor(rate%,time period)

=  $1.85 ÷ (1+10%) + $45 ÷ (1+10%)

=  $1.85 ÷ 1.1 + 45 ÷ 1.1

= $ 1.68181 + $40.91

= $42.5918

= $42.60

Learn more: brainly.com/question/17429689

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