QuestionWhat would you pay for a share of MajorSoft Corporation stock today if the next dividend is expected to be $\$ 5.56$ per share, your required return on the stock is $14.50 \%$, and the stock is expected to be worth $\$ 213.20$ one year from now? 6:41
Multiple Choice $\$ 191.06$ $\$ 204.39$ \$194.85$\$184.33$ \$186.20

Studdy Solution
Calculate the present value of the stock. First, calculate the numerator:
$$5.56 + 213.20 = 218.76$$
Then calculate the denominator:
$$1 + 0.145 = 1.145$$
Now, divide the numerator by the denominator to find $P_0$:
$$P_0 = \frac{218.76}{1.145} \approx 191.06$$
The present value or the price you would pay today for a share is:
$\boxed{191.06}$