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Viktor Karchenko is planning to buy a security which pays a dividend of $100 per year...

Viktor Karchenko is planning to buy a security which pays a dividend of $100 per year indefinitely, with the first dividend to be received in five years from now. Given that the required rate of return is (10%,1), how much should Viktor pay for the security?

Round your answer to the nearest cent.

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Answer #1

- Dividend in year 5(D5) = $100

Required rate of Return(ke) = 10%

Calculating the Price of Security today:-

P0 = 1000*0.68301345536

P0 = $683.01

So, the amount Viktor pay for the security is $683.01

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