Savickas Petroleum's Stock Has a Required Return of 12%, and the Stock

question 61

Multiple Choice

Savickas Petroleum's stock has a required return of 12%, and the stock sells for $40 per share. The firm just paid a dividend of $1.00, and the dividend is expected to grow by 30% per year for the next 4 years, so D4 = $1.00(1.30) 4 = $2.8561. After t = 4, the dividend is expected to grow at a constant rate of X% per year forever. What is the stock's expected constant growth rate after t = 4, i.e., what is X?

• A) 5.17%
• B) 5.44%
• C) 5.72%
• D) 6.02%
• E) 6.34%

Apply financial analysis techniques to make informed decisions.

Differentiate between liquidity ratios, such as the current ratio and quick ratio, and understand their importance.

Analyze sales performance and operational efficiency using turnover ratios and growth percentages.

Understand key financial metrics and their calculations related to working capital management.

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