A Firm Does Not Pay a Dividend

question 14

Multiple Choice

A firm does not pay a dividend. It is expected to pay its first dividend of $1.50 per share in three years. This dividend will grow at 6 percent indefinitely. Using a 10 percent discount rate, compute the value of this stock.

• A) $29.86
• B) $30.99
• C) $41.25
• D) $42.79

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