What Is the Current Price of a Telecommunication Company's Stock

question 61

Multiple Choice

What is the current price of a telecommunication company's stock if the current dividend is $0.80, the expected constant growth rate in dividends is 5% and the required return is 10%?

• A) $16.00
• B) $16.80
• C) $8.00
• D) $8.40

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Definitions:

Stockholders' Equity

The residual interest in the assets of a company after deducting liabilities, essentially representing ownership interest.

Expense Accounts

Accounts in the general ledger that are used to record various costs and expenses incurred by a business.

Revenue Accounts

Accounts that track the income a business receives from its various activities, such as sales of products or services.

Loss Accounts

Accounts used to record the loss in value of assets or to represent expenses that reduce net income.