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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