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

question 9

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 dividends for years 1,2,and 3 are

• A) $2, $2.08, $2.16
• B) $2, $2.05, $2.10
• C) $2.16, $2.24, $2.32
• D) $2.16, $2.33, $2.52
• E) $2.07, $2.14, $2.21

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Definitions:

Rescinding Contract

The process of unilaterally terminating a contract by one of the parties involved, effectively rendering the agreement null and void from the outset.

Mistakes

Errors or misunderstandings that can occur in various contexts, such as in contracts, decisions, or actions.

Untrue Statements

Assertions or claims that are not accurate or correct, often made with the intent to deceive.

Mutual Mistake

A legal concept where all parties involved have a mistaken understanding regarding a basic assumption on which a contract is based, potentially making the contract voidable.