Suppose the Pale Hose Corp

question 165

Multiple Choice

Suppose the Pale Hose Corp. is expected to pay a dividend next year of $1.75 per share. Both sales and profits for Pale Hose are expected to grow at a rate of 15% for the following two years and then at 2% per year thereafter indefinitely. Dividend growth is expected to match sales growth. If the required return is 14%, what is the value of a share of Pale Hose?

• A) $16.49
• B) $16.98
• C) $17.92
• D) $18.49
• E) $19.76

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Definitions:

Lewis Structure

Diagrams that show the bonding between atoms of a molecule and the lone pairs of electrons that may exist in the molecule.

Aniline

An organic compound with the formula C6H5NH2, used as a precursor to many industrial chemicals, particularly in dye manufacturing.

Aromatic Compound

Organic compounds that contain a planar unsaturated ring of atoms that exhibits a higher degree of stability due to resonance structures.

Phenol

An aromatic organic compound with the molecular formula C6H5OH, noted for its antiseptic properties.