A Fast Growing Firm Recently Paid a Dividend of $0

question 23

Multiple Choice

A fast growing firm recently paid a dividend of $0.80 per share. The dividend is expected to increase at a rate of 30 percent for the next four years. Afterwards, a more stable 7 percent growth rate can be assumed. If a 10 percent discount rate is appropriate for this stock, what is its value?

• A) $60.48
• B) $60.18
• C) $61.34
• D) $73.86

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Definitions:

Pluripotent

The ability of a cell to develop into several different types of cells in the body, characteristic of stem cells.

Stem-Cell Research

A field of study focused on the properties of stem cells and their potential to develop into different types of cells in the body, used for regenerative medicine and therapeutic applications.

Synaptic Cleft

The small gap between neurons across which neurotransmitters are released to transmit signals from one neuron to another.

Axon Terminal

The endpoint of an axon where neurotransmitters are released to send signals to other neurons or muscle cells.