Home parties is paying an annual dividend of $1.25 every other year. the last dividend was paid last year. the firm will continue this policy until two more dividend payments have been paid. one year after the last normal dividend payment, the company plans to pay a final liquidating dividend of $25 per share. what is the current market value of this stock if the required return is 17 percent?
$17.14
$18.92
$15.19
$13.16
$17.53

The answer is: $15.19

Explanation:

We have to calculate the present value of the 3 future cash flows of Home Parties. After the third year, Home Parties will shut down, so no more cash flows are expected.

We can use an excel spreadsheet to calculate the present value, but since the operations are quite simple, we can also do them by ourselves.

PV = (1.25 / 1.17) + (1.25 / 1.17³) + (25 / 1.17⁴) = 1.07 + 0.78 + 13.34 = $15.19

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.

two years ago, when picking flowers in the mountains back of yosemite valley, i found a book. it was blotted and storm-beaten; all of its outer pages were mealy and crumbly. the paper seemed to dissolve like the snow beneath which it had been buried, however; many of the inner pages were well preserved. and although all were more or less stained and torn, whole chapters were easily readable. this is the condition of the great open book of yosemite glaciers today; its granite pages have been torn and blurred by the same storms that wasted the castaway book.

two years ago, when picking flowers in the mountains back of yosemite valley; i found a book. it was blotted and storm-beaten, all of its outer pages were mealy and crumbly. the paper seemed to dissolve like the snow beneath which it had been buried, however, many of the inner pages were well preserved. and although all were more or less stained and torn; whole chapters were easily readable. this is the condition of the great open book of yosemite glaciers today, its granite pages have been torn and blurred by the same storms that wasted the castaway book.