ABC Corp. is expected to pay a dividend of $5.00 per year indefinitely. If the appropriate rate of return on this stock is 5 percent per year, and the stock consistently goes ex-dividend 45 days before the dividend payment date, what will be the expected minimum price in light of the dividend payment logistics?
And the minimum stock price, which will occur right after the stock goes ex-dividend, will be: P0 = ($5.00/0.05) × (1/[(1 + 0.00013) 45th power]) = $99.40
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