Exhibit 11.6 Use the Information Below for the Following Problem(S)

question 69

Multiple Choice

Exhibit 11.6
Use the Information Below for the Following Problem(S)
Consider a firm that has just paid a dividend of $2. An analyst expects dividends to grow at a rate of 8% per year for the next five years. After that dividends are expected to grow at a normal rate of 5% per year. Assume that the appropriate discount rate is 7%.
-Refer to Exhibit 11.6.The present value today of dividends for years 1 to 5 is

• A) $4.06
• B) $10.28
• C) $12.40
• D) $14.52
• E) $10.0

---

Definitions:

Bullwhip Measure

A method or metric used to quantify the degree of the bullwhip effect within a supply chain.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, used in statistics to quantify the variance from the mean.

Bullwhip Effect

The phenomenon where variations in demand at the retail level cause progressively larger fluctuations in demand at the wholesale, distributor, manufacturer, and raw material supplier levels.

Shortage Gaming

A strategy used in supply chain management where participants may exaggerate their needs to avoid stockouts, often leading to inefficiencies or distortions in supply chains.