Will Co Is Expected to Pay a Dividend of $2 Per

question 35

Multiple Choice

Will Co. is expected to pay a dividend of $2 per share at the end of year -1(D1) and the dividends are expected to grow at a constant rate of 4% forever. If the current price of the stock is $20 per share calculate the expected return or the cost of equity capital for the firm.

• A) 10%
• B) 4%
• C) 14%
• D) None of the above.

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Definitions:

Activation Energies

The minimum amount of energy required to initiate a chemical reaction.

Antibonding π Molecular Orbital

A molecular orbital formed when lobes of p orbitals on two atoms combine in a phase mismatch, weakening the bond between the atoms.

Allyl Cation

A positively charged species (ion), specifically a reactive intermediate with the structure CH2=CH-CH2+.

LUMO

The Lowest Unoccupied Molecular Orbital, which is the lowest energy orbital that can accept electrons.