A Firm Does Not Pay a Dividend

question 100

Multiple Choice

A firm does not pay a dividend. It is expected to pay its first dividend of $1.00 per share in two years. This dividend will grow at 5 percent indefinitely. Using a 12 percent discount rate, compute the value of this stock.

• A) $12.76
• B) $12.19
• C) $11.96
• D) $11.39

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Definitions:

Memorandum

A written document used within an organization to communicate or record details about a specific topic, decision, or instruction.

Motion

A procedural request or application presented by an attorney to the court on behalf of a client.

Letter

A written message that can be handwritten or printed on paper. It is usually sent to the recipient via mail or delivery.

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An evaluation or examination that is conducted impartially, without preconceived notions or prejudices.