A Fast Growing Firm Recently Paid a Dividend of $1

question 20

Multiple Choice

A fast growing firm recently paid a dividend of $1.00 per share. The dividend is expected to increase at a rate of 15 percent for the next 3 years. Afterwards, a more stable 6 percent growth rate can be assumed. If a 10 percent discount rate is appropriate for this stock, what is its value?

• A) $33.54
• B) $37.99
• C) $39.37
• D) $42.03

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Definitions:

Document

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The state of being unable to perform a task or action due to lack of skill, strength, or capacity.

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A venomous snake characterized by a segmented rattle at the end of its tail, renowned for its distinct buzzing sound when threatened.