You are considering buying a painting by a relatively unknown avant-garde artist named Demento Jones. Knowing something about the market for art, you are convinced that in exactly two years, Demento will be discovered, and you will be able to sell the painting for $50,000.If you don’t buy the picture, you’ll simply put your money in a savings account for two years at 3% interest, compounded annually.

What is the most you should pay for the painting today? Round your answer to the nearest dollar.Show your calculations.

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ABC Corp. will pay dividends of $7.75, $8.50, $9.75, and $10.25 at the end of years 1, 2, 3, and 4, respectively. It will pay no dividends after that. If you require a rate of return of 14 percent from stocks in this risk class, how much is the stock worth to you?

ABC Company just paid a dividend of $4 per share, and that dividend is expected to grow at a constant rate of 4% per year in the future The required return on equity market is 95%, the risk-free rate is currently 35% and the company is beta is 175 What is your estimate of the current stock price?

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