Merrell Enterprises' Stock Has an Expected Return of 14

question 17

Multiple Choice

Merrell Enterprises' stock has an expected return of 14%.The stock's dividend is expected to grow at a constant rate of 8%, and it currently sells for $50 a share.Which of the following statements is CORRECT?

• A) The stock's dividend yield is 8%.
• B) The current dividend per share is $4.00.
• C) The stock price is expected to be $54 a share one year from now.
• D) The stock price is expected to be $57 a share one year from now.
• E) The stock's dividend yield is 7%.

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Definitions:

FOB Shipping Point

A term used in shipping contracts to indicate that the buyer is responsible for the cost and risk of shipping as soon as the goods leave the seller's premise.

Perpetual Inventory System

An inventory accounting system where updates are made continuously as transactions occur, providing a real-time inventory balance.

Selling and Administrative Expenses

Costs related to selling products and managing the business, excluding production costs.

Multiple-Step Income Statement

An income statement that separates operating revenues and operating expenses from non-operating revenues, expenses, and other gains and losses.