Mack Industries Just Paid a Dividend of $1

question 19

Multiple Choice

Mack Industries just paid a dividend of $1.00 per share , and 15 percent next year. After two years the dividend is expected to grow at a constant rate of 5 percent. The required rate of return on the company's stock is 12 percent. What should be the current price of the company's stock?

• A) $12.33
• B) $16.65
• C) $16.91
• D) $18.67
• E) $19.67

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Definitions:

Hormone

A naturally occurring compound in the body that directs and controls the operation of specific cells or organs.

Endosperm

A material formed within the seeds of the majority of flowering plants after fertilization, providing nutrition to the growing embryo.

Ovary Wall

The protective outer layer of the ovary in female organisms, enclosing the ovules or eggs.