1. Why are warrants speculative? Why are they issued?
2. Which is the amount that should be paid for a stock that will pay a dividend of $2.47 in one year and $3.14 in two years? After that, the stock price will grow at a constant 5% per year forever. The appropriate discount rate is 12%.
Show your answer to the nearest $.01.
Do not use the $ sign in your answer.