Wheels and More, Inc

question 104

Multiple Choice

Wheels and More, Inc. normally pays an annual dividend. The last such dividend paid was $3.00, all future dividends are expected to grow at a rate of 8 percent per year, and the firm faces a required rate of return on equity of 12 percent. If the firm just announced that the next dividend will be an extraordinary dividend of $7 per share that is not expected to affect any other future dividends, what should the stock price be?

• A) $78.76
• B) $81.00
• C) $82.00
• D) $84.36

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