The Sly Fox pays a constant dividend of $1.46 a share. The company announced today that it will continue to pay the dividend for another 2 years and then in Year 3 it will pay a final liquidating dividend of $15.25 a share. What is one share of this stock worth today at a required return of 18.5 percent?

One share of this stock worth today at a required return of 18.5 percent is $11.44

Explanation:

In order to calculate what is one share of this stock worth today at a required return of 18.5 percent we would have to calculate the following formula:

Stock value = D1 / (1+r) t + D2 / (1+r) t + D3 / (1+r) t

Stock value = 1.46/1.185 + 1.46/1.1852 + 15.25/1.1853

Stock value = 1.2320 + 1.0397 + 9.1646

Stock value=$11.44

One share of this stock worth today at a required return of 18.5 percent is $11.44