A Company Is Expected to Pay a Dividend of $1

question 40

Multiple Choice

A company is expected to pay a dividend of $1.25 per share every year indefinitely and the equity cost of capital for the company is 7.5%. What price would an investor be expected to pay per share ten years in the future?

• A) $16.67
• B) $33.34
• C) $41.68
• D) $25.01

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Definitions:

Subtropical Regions

Areas of the world that lie just below the tropical zones, characterized by hot, humid summers and mild winters.

Microevolution

The change in allele frequencies that occurs over time within a population, leading to the evolution of small-scale adaptations.

Macroevolution

Evolutionary patterns and trends on a larger scale than microevolution; e.g., adaptive radiation, coevolution.

Fertilization

The process of a sperm cell joining with an egg cell to produce a zygote, initiating the development of a new organism.