Final answer:
To calculate the value of one share of the stock today, we need to calculate the present value of the expected dividends. The present value of the constant dividend payments for the next two years is $2.27, and the present value of the final liquidating dividend in year 3 is $11.61. When we sum up all the present values, we get the value of one share of the stock as $13.88 today.
Step-by-step explanation:
To calculate the value of one share of the stock today, we need to calculate the present value of the expected dividends. First, let's calculate the present value of the constant dividend payments for the next two years.
Year 1 Dividend: $1.46 / (1 + 0.185) ^ 1 = $1.23
Year 2 Dividend: $1.46 / (1 + 0.185) ^ 2 = $1.04
Next, let's calculate the present value of the final liquidating dividend in year 3.
Year 3 Dividend: $15.25 / (1 + 0.185) ^ 3 = $11.61
Finally, let's sum up all the present values to get the value of one share of the stock today.
Total Value: $1.23 + $1.04 + $11.61 = $13.88. Therefore, one share of this stock is worth $13.88 today at a required return of 18.5 percent.