Use the Information for the Question(s)below

question 50

Multiple Choice

Use the information for the question(s) below.
The JRN Corporation will pay a constant dividend of $3 per share,per year,in perpetuity.Assume that all investors pay a 20% tax on dividends and that there is no capital gains tax.The cost of capital for investing in JRN stock is 12%.
-Assume that management makes a surprise announcement that JRN will no longer pay dividends but will use the cash to repurchase stock instead.The price of a share of JRN's stock is now closest to:

• A)$20.00.
• B)$25.00.
• C)$18.00.
• D)$24.00.

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Definitions:

Square Root

A value that, when multiplied by itself, gives the original number.

Test Scores

Numerical outcomes derived from assessments designed to measure a person's knowledge, abilities, or performance in a specific area.

Skewed

Skewed describes a distribution that is asymmetrical and not balanced, often with a longer tail on one side of the peak than on the other.

Distribution

In statistics, the way in which values in a dataset are spread or dispersed across the range of possible values.