CBC Stock Is Expected to Sell for $22 Two Years

question 224

Multiple Choice

CBC stock is expected to sell for $22 two years from now. Supernormal growth of 5% is expected for the next two years. The current dividend is $1 and the required return is 15%. What constant growth rate is expected beginning in year 3?

• A) 6.5%
• B) 6.7%
• C) 8.1%
• D) 8.4%
• E) 9.5%

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Definitions:

Aggressive Instincts

The innate or inherent impulses that drive individuals to act or react in hostile and confrontational ways.

Personal Weakness

Individual traits or characteristics perceived as areas of improvement or vulnerability, often impacting personal development or performance.

Harry Stack Sullivan

An American psychiatrist known for his theory of interpersonal relations and his influence on the development of psychoanalytic theories of personality.