Parcel Corporation Is Expected to Pay a Dividend of $5

question 4

Multiple Choice

Parcel Corporation is expected to pay a dividend of $5 per share next year, and the dividends pay out ratio is 50%. If the dividends are expected to grow at a constant rate of 8% forever and the required rate of return on the stock is 13%, calculate the present value of the growth opportunity.

• A) $100
• B) $76.92
• C) $23.08
• D) None of the above

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Definitions:

Evoked Set

Comprises the alternative brands or stores that the consumer states he or she would consider when making a purchase decision.

Adidas Shoes

A brand of athletic and casual footwear produced by the German multinational corporation Adidas, known for its sports and lifestyle products.

Consumer Decision Process

A series of steps a buyer goes through before making a purchase decision.

Internal Search

The process by which individuals use their memories and personal experiences to make decisions.