Kinston Industries Just Announced That It Will Cut Its Dividend

question 64

Multiple Choice

Kinston Industries just announced that it will cut its dividend from $3.00 to $2.00 per share and use the extra funds to expand its operations.Kinston's dividends were expected to grow at a 2% rate,and its share price was $37.50.With the new expansion,Kinston dividends are expected to grow at a 5% rate.Kinston's share price following this announcement should be:

• A)$20.00.
• B)$30.00.
• C)$37.50.
• D)$40.00.

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Definitions:

Shareholders

Individuals or entities that own shares in a corporation, giving them the right to vote on corporate matters and receive dividends.

Director Serve

The role or term during which an individual serves on a board of directors for an organization or corporation.

Corporate Directors

Individuals elected by shareholders to manage a corporation's affairs and make major decisions.

Articles

Short for "articles of incorporation," which are documents filed with a government body to legally document the creation of a corporation.