You own 1,000 shares of stock in Avondale Corporation. You will receive a dividend of $1.10 per share in one year. In two years, Avondale will pay a...

You own 1,000 shares of stock in Avondale Corporation. You will receive a dividend of $1.10 per share in one year. In two years, Avondale will pay a liquidating dividend of $56 per share. The required return on Avondale stock is 14 percent. Suppose you want only $500 total dividends the first year. What will your homemade dividend be in two years?

SolutionDividends received in one year( 1,000 × $1.10)$1,100.00Price of stock in Year 1($56/1.14)$49.12Number of shares purchased(1100-500)/49.1212.21sharesDividend in year 2= $...