Hupta Corporation -Using the Dividend Discount Model, Assuming Dividends Grow at 10

question 7

Multiple Choice

Hupta Corporation
$$\begin{array} { l r } & \mathbf { 2 0 0 5 } \\\text { Net income } & \$ 6,000 \\\text { Dividends } & \$ 2,000 \\\text { Total assets-12/31/05 } & \$ 50,000 \\\text { Total liabilities-12/31/05 }& \$ 20,000 \\\text { Number of shares outstanding } & 1,000 \\\text { Cost of equity } & 10 \%\end{array}$$
-Using the dividend discount model, assuming dividends grow at 10% in 2006 and at 5% thereafter, what is the value per share of Hupta at 12/31/05?

• A)$48.20
• B)$44.00
• C)$40.18
• D)$40.00

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Definitions:

Pyridium

A medication commonly used to ease the pain, irritation, or urgency caused by urinary tract infections by numbing the bladder and urethra.

Urinary Incontinence

The loss of bladder control leading to the unintended release of urine.

Toileting

The process of assisting or managing personal hygiene and excretion, often used in healthcare to refer to helping patients use the toilet.

Diuretic

A substance that promotes the production of urine, helping the body to remove excess water and salts.