Home / Questions / Suppose Maxwell Corporation will pay a dividend of 282 per share at the end of this
Suppose Maxwell Corporation will pay a dividend of $2.82 per share at the end of this year and $3.06 per share next year. You expect Maxwell's share price to be $51.68 in two years. Assume that Maxwell's equity cost of capital is 10.2%. a. What price would you be willing to pay for a Maxwell share today, if you planned to hold the share for two years? b. Suppose instead you plan to hold the share for one year. For what price would you expect to be able to sell a Maxwell share in one year? c. Given your answer in part b, what price would you be willing to pay for z Maxwell share today if you planned to hold the sharefor one year? How does this compare to your answer in part a? a. If you planned to hold the share for two years, the price you would pay for a Maxwell share today is $ 49.67. (Round to the nearest cent.) b. The price would you expect to be able to sell a Maxwell share for in one year is $ . (Round to the nearest cent.) c. Given your answer in part b, the price you would be willing to pay for a Maxwell share today, if you planned to hold the share for one year is $ . (Round to the nearest cent.) When you compare your answer in part a to the answer in part c, (Select the best choice below.) O A. They are not comparable values. OB. The price in part a is higher than the price in part c. O C. The price in part a is the same as the price in part c. OD. The price in part a is lower than the price in part c.
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