The Francis Company Is Expected to Pay a Dividend of D1

question 2

Multiple Choice

The Francis Company is expected to pay a dividend of D1 = $1.25 per share at the end of the year, and that dividend is expected to grow at a constant rate of 6.00% per year in the future. The company's beta is 1.15, the market risk premium is 5.50%, and the risk-free rate is 4.00%. What is the company's current stock price?

• A) $28.90
• B) $29.62
• C) $30.36
• D) $31.12
• E) $31.90

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Definitions:

Coelomic Fluid

A fluid found within the coelom, the body cavity of most animals, that serves various functions including circulation and the provision of a hydrostatic skeleton.

Mesoderm

The middle layer of an embryo in multicellular organisms, giving rise to muscles, bones, and the circulatory system among other structures.

Water-Vascular System

A network of hydraulic canals unique to echinoderms, such as starfish, used for locomotion, feeding, and respiration.

Exoskeleton

External skeleton of some invertebrates; hard external parts that muscles attach to and move.