Zero-Sum Enterprise Expects to Pay an Annual Dividend of $0

question 95

Multiple Choice

Zero-Sum Enterprise expects to pay an annual dividend of $0.48 next year. Dividends and earnings have been growing at a compound annual rate of 8 percent and are expected to continue growing at that rate. What is an investor's required rate of return on Zero-Sum if the current price is $12?

• A) 12.3%
• B) 12.0%
• C) 10.0%
• D) 10.3%

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Definitions:

Meningitis

An acute inflammation of the protective membranes covering the brain and spinal cord, known collectively as the meninges, which can be caused by infection with viruses, bacteria, or other microorganisms, and in some cases by certain drugs.

Convulsions

Involuntary, rapid, and uncontrollable muscle contractions often caused by electrical disruptions in the brain.

CSF

Cerebrospinal Fluid; a clear, colorless body fluid found in the brain and spinal cord, providing cushioning and maintaining a stable environment for the central nervous system.

Shock Absorber

A mechanical device designed to smooth out or damp shock impulse, and dissipate kinetic energy, often used in vehicles and other systems requiring vibration control.