Universal Air Is a No Growth Firm and Has Two

question 14

Multiple Choice

Universal Air is a no growth firm and has two million shares outstanding. It is expected to earn a constant 20 million per year on its assets. If all earnings are paid out as dividends and the cost of capital is 10%, calculate the current price per share for the stock.

• A) $200
• B) $150
• C) $100
• D) $50

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Definitions:

Shareholder Theory

A theory in business ethics suggesting that the primary responsibility of a company is to maximize the wealth of its shareholders.

Triple Bottom Line Theory

A sustainability framework that examines a company's social, environmental, and financial performance, aiming to measure the broader impact of the company's activities.

Dividend Payments

Distributions of earnings made to shareholders by corporations, usually in the form of cash or additional shares.