1 answer

Cromwell Properties Inc., a real estate investment trust (REIT), is in the process of an extended...

Question:

Cromwell Properties Inc., a real estate investment trust (REIT), is in the process of an extended liquidation. It plans to pa
Cromwell Properties Inc., a real estate investment trust (REIT), is in the process of an extended liquidation. It plans to pay a $7.50 annual dividend for the next 14 years and will cease dividends forever. The required return on this stock is 9.5% What is the current price per share? Round to two decimal places. Answer:

Answers

Current price = Present value of future cash flows

Current price = Annuity * [1 - 1 / (1 + r)n] / r

Current price = 7.5 * [1 - 1 / (1 + 0.095)14] / 0.095

Current price = 7.5 * [1 - 0.280674] / 0.095

Current price = 7.5 * 7.571852

Current price = $56.79

.

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