In 2006 and? 2007, Kenneth Cole Productions? (KCP) paid annual dividends of $ 0.69. In? 2008, KCP paid an annual dividend of $ 0.33 and then paid no further dividends through 2012. Suppose KCP was acquired at the end of 2012 for $ 15.38$ per share.
a. What would an investor with perfect foresight of the above been willing to pay for KCP at the start of? 2006?
?(Note?: Because an investor with perfect foresight bears no? risk, use a? risk-free equity cost of capital of 5.2 %)
b. Does your answer to ?(a?) imply that the market for KCP stock was inefficient in? 2006?