Cellular Talk Is a New Firm in a Rapidly Growing

question 21

Multiple Choice

Cellular Talk is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 25% a year for the next three years and then decreasing the growth rate to 6% per year. The company just paid its annual dividend in the amount of $0.80 per share. What is the current value of one share of this stock if the required rate of return is 17%?

• A) $11.17
• B) $12.14
• C) $12.94
• D) $14.27
• E) $15.06

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Definitions:

Craves

Strongly desires or yearns for something or someone.

Ironic Processing

The psychological process where attempts to suppress certain thoughts make them more likely to surface.

Thought Suppression

The process of consciously attempting to avoid thinking certain thoughts.

Party

A social gathering of invited guests, typically involving eating, drinking, and entertainment.