The Francis Company Is Expected to Pay a Dividend of D1

question 2

Multiple Choice

The Francis Company is expected to pay a dividend of D1 = $1.25 per share at the end of the year, and that dividend is expected to grow at a constant rate of 6.00% per year in the future. The company's beta is 1.15, the market risk premium is 5.50%, and the risk-free rate is 4.00%. What is the company's current stock price?

• A) $28.90
• B) $29.62
• C) $30.36
• D) $31.12
• E) $31.90

---

Definitions:

Unearned Revenue

Money received by an entity for a service or product yet to be provided or delivered.

Periodic Inventory System

An inventory accounting system where updates are made to inventory levels and cost of goods sold at specific periods.

Worksheet

A document used by accountants to bring together all the data for financial statements, making adjustments and closing entries.

Mortgage Payable

A liability account on a company's balance sheet that represents funds borrowed, secured by property, to be paid back with interest.