Problem:
Langley Enterprises pays a constant dividend of $1.40 a share. The company announced today that it will continue to do this for another 2 years after which time it will discontinue paying dividends permanently.
Required:
Question: What is one share of this stock worth today if the required rate of return is 9 percent?
- $3.98
- $3.66
- $2.46
- $2.80
- $2.16
Note: Show supporting computations in good form.