Consider an all-equity firm, that pays no taxes, with n=100 shares outstanding and a cost of equity rE=10%. The firm will be liquidated at t=2.

Published by admin at September 14, 2023

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•Consider an all-equity firm, that pays no taxes, with n=100 shares outstanding and a cost of equity rE=10%. The firm will be liquidated at t=2. The total cash flows, including the proceeds from liquidation, are $10,000 in each of the next two years. The firm is considering three alternative dividend policies. What is the share price today, P0, under each policy?

Consider an all-equity firm, that pays no taxes, with n=100 shares outstanding and a cost of equity rE=10%. The firm will be liquidated at t=2.

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