World-Tour Co

question 63

Multiple Choice

World-Tour Co. has just now paid a dividend of $2.83 per share (D0) ; the dividends are expected to grow at a constant rate of 6% per year forever. If the required rate of return on the stock is 16%, what is the current value on stock, after paying the dividend?

• A) $30
• B) $56
• C) $70
• D) $48

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Definitions:

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