XYZ Corporation's Next Dividend Is Expected to Be $3 Per

question 75

Multiple Choice

XYZ Corporation's next dividend is expected to be $3 per share. Dividend growth rate has been at 2% and expected to be so into the future. If investor's return is 10%, calculate the stock price last year.

• A) $35.86
• B) $36.16
• C) $36.46
• D) $36.76
• E) 37.07

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Definitions:

Discount Rate

The discount rate utilized in DCF analysis for assessing the present worth of upcoming cash flows.

Rate of Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment's initial cost.

Investment

Assets or items acquired with the goal of generating income or appreciation in the future.

Annual Effective Rate

The interest rate that is adjusted for compounding over a given period, showing the real return on savings or cost of borrowing.