Final answer:
While the full calculation for ABC company's share price is not possible due to missing information, we explored a simplified example with Babble, Inc. to illustrate how to calculate the present value of expected dividends. In this illustration, by discounting future dividends, we determined that a shareholder might accept approximately $256,500 per share for Babble, Inc.
Step-by-step explanation:
When determining the selling price you will accept for a share before the ex-dividend date, it is important to calculate the present value of the expected dividends. In the given example of ABC company, we would need to calculate the present value of the dividend stream using the dividend constant growth rate and the discount rate. However, the student's question is missing critical information that is needed to perform a complete calculation. Therefore, we can't provide one of the choices as the correct selling price for August 13, 2019. Instead, let's look at a simplified example:
Consider the case of Babble, Inc., a company that is expected to pay out profits as dividends during the next two years until it disbands. We use the present value (PV) calculations and discount each expected dividend back to its present value, then sum these amounts to get the total present value of all the dividends as of the present time. With a total profit of $51.3 million and 200 shares, we calculate the price per share as follows: 51.3 million/200 = 0.2565 million, which means the price per share should be about $256,500 per share.
Applying a similar approach to ABC company and incorporating its specific figures such as the discount rate, growth rate, and dividend amount, one could calculate the present value of the dividends and thereby determine an acceptable selling price for a share. However, without more information on the number of expected future dividends and their timing, a precise answer cannot be provided for ABC company.