Problem
The Fix Mines Company just paid dividends of RM2.00 per share. However, the future does not look bright because of the global economic downturn. The mine is virtually depleted, and earnings are expected to decline by 10% per year for the foreseeable future. However, the firm will continue its policy of paying out 40% of earnings as dividends for the next four (4) years. In the fifth year, the firm will liquidate all assets, and then use the proceeds to buy back all outstanding amounts of shares at RM9.50 per share. The required rate of return on the firm's stock is 15%. Calculate the stock price today.