Consider an all-equity firm, that pays no taxes, with n=100 shares outstanding and a cost of equity rE=10%. The firm will be liquidated at t=2.

•Consider an all-equity firm, that pays no taxes, with n=100 shares outstanding and a cost of equity rE=10%. The firm will be liquidated at t=2. The total cash flows, including the proceeds from liquidation, are $10,000 in each of the next two years. The firm is considering three alternative dividend policies. What is the share price today, P0, under each policy?