Use the Information for the Question(s)below

question 70

Multiple Choice

Use the information for the question(s) below.
Defenestration Industries plans to pay a $4.00 dividend this year and you expect that the firm's earnings are on track to grow at 5% per year for the foreseeable future.Defenestration's equity cost of capital is 13%.
-Suppose that Defenestration decides to pay a dividend of only $2 per share this year and use the remaining $2 per share to repurchase stock.If Defenestration's payout rate remains constant,then Defenestration's stock price is closest to:

• A)$50.00.
• B)$22.25.
• C)$32.30.
• D)$30.75.

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Definitions:

Differing Values

The existence of different beliefs, ethics, or priorities among individuals or groups, often leading to contrasting viewpoints or conflicts.

Manipulating

The act of controlling or influencing a person or situation cunningly or unfairly, often for one's own advantage.

Nonjudgmental

An attitude or approach of acceptance without making moral or evaluative judgments.

Relationships

Connections or associations between people, based on feelings, interactions, and commitments.