Gen Corp. is expected to pay a dividend of $3.40 per year indefinitely. The appr

Question

Gen Corp. is expected to pay a dividend of $3.40 per year indefinitely. The appropriate rate of return on this stock is 10 percent per year, and the stock consistently goes ex-dividend 30 days before dividend payment date.

What will be the expected minimum price in light of the dividend payment logistics? (Use 365 days a year. Do not round intermediate calculations and round your final answer to 2 decimal places.)

What will be the expected maximum price in light of the dividend payment logistics? (Use 365 days a year. Do not round intermediate calculations and round your final answer to 2 decimal places.)

Gen Corp. is expected to pay a dividend of $3.40 per year indefinitely. The appropriate rate of return on this stock is 10 percent per year, and the stock consistently goes ex-dividend 30 days before dividend payment date.

Explanation / Answer

Minimum stock price=(3.40/10%)/(1+0.000335)^30

=33.66

Maximum stock price=3.40/(1+0.000335)^30+(3.40/10%)/(1+0.000335)^30

=37.03

the above is answer..

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