Assume Zero-Sum Enterprise Pays an Annual Dividend of $1

question 60

Multiple Choice

Assume Zero-Sum Enterprise pays an annual dividend of $1.40 per share and that neither earnings nor dividends are expected to grow in the future. What is the value of Zero-Sum's stock to an investor who requires a 14 percent rate of return?

• A) $14
• B) $10
• C) $20
• D) $0

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Definitions:

Ambiguous

Referring to language or statements that have more than one possible interpretation or meaning, often leading to confusion or misunderstanding.

Critical Thinking

The process of actively and skillfully conceptualizing, applying, analyzing, synthesizing, and evaluating information to reach an answer or conclusion.

Interpret

To explain the meaning of information, words, or actions, especially in a specific context.