Ewert Enterprises' Stock Currently Sells for $30

question 5

Multiple Choice

Ewert Enterprises' stock currently sells for $30.50 per share. The stock's dividend is projected to increase at a constant rate of 4.50% per year. The required rate of return on the stock, rs, is 10.00%. What is Ewert's expected price 3 years from today?

• A) $31.61
• B) $32.43
• C) $33.26
• D) $34.81

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Definitions:

Cash

Cash involves money in the form of currency, which includes bank notes and coins, that is in hand or readily available in deposit accounts for immediate use.

Building

A structure established or built from materials to provide shelter or accommodate individuals, businesses, or activities.

Consolidation

The process of combining financial statements of parent and subsidiary companies into one comprehensive set of statements.

Fair Value

The estimated market value of an asset or liability, based on current conditions and informed market participant transactions.