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:

Chloropyridines

Organic compounds consisting of a pyridine ring substituted with one or more chlorine atoms.

NaCN

Sodium cyanide, a highly toxic salt used industrially in gold mining and as a reactant in organic synthesis, particularly for nitrile formation.

Tertiary Amine

A nitrogen-containing compound where the nitrogen atom is bonded to three carbon atoms, often used as a base or catalyst in organic synthesis.

Alkaloid

A group of naturally occurring chemical compounds that mostly contain basic nitrogen atoms, found in plants and are often used for their medicinal properties.