How Much Are You Willing to Pay for One Share

question 379

Multiple Choice

How much are you willing to pay for one share of stock if the company just paid a $.80 annual dividend, the dividends increase by 4% annually and you require an 8% rate of return?

• A) $19.23
• B) $20.00
• C) $20.40
• D) $20.80
• E) $21.63

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Definitions:

Credit Policy

Guidelines that a company follows to determine the creditworthiness of customers, which influence terms of credit and collection procedures.

Total Revenue

The total amount of income generated by the sale of goods or services related to the company's primary operations before any expenses are deducted.

Investment In Receivables

The funds tied up in the credit sales of a company, indicating the amount of money owed by customers for goods or services delivered on credit.

Credit Sales

Sales in which the customer is allowed to purchase goods or services with an agreement to pay at a later date.