6. The Cart Wheel plans to pay an annual dividend of $1.20 per share next year, $1.00 per share a year for the following two years, and then cease paying dividends altogether. How much is one share of this stock worth to you today if you require a 17% rate of return

Price per share = $2.38

Explanation:

Using the dividend discount model, we can calculate the fair price per share of the stock.

The formula for price is,

P = D1 / 1+r + D2 / (1+r)^2 + ... and so on

Where,

Thus, Price for such a stock is,

P = 1.2 / (1+0.17) + 1 / (1+0.17)^2 + 1 / (1+0.17)^3    => $2.3805

lbc corporation makes and sells a product called product wz. each unit of product wz requires 4.1 hours of direct labor at the rate of $20.00 per direct labor-hour. management would like you to prepare a direct labor budget for june. the company plans to sell 28,000 units of product wz in june. the finished goods inventories o