Which of the Following Values Is Closest to the Amount

question 41

Multiple Choice

Which of the following values is closest to the amount that should be paid for a share that will pay a dividend of €10 in one year and €11 in two years? The share will be sold in 2 years for an estimated price of €120.The appropriate discount rate is 9%.

• A)€114.60
• B)€119.43
• C)€124.20
• D)€129.50
• E)€138.75

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Definitions:

Cost-Minimization Rule

A principle in economics that suggests a firm should produce any given output at the lowest possible cost.

Statements

Assertions or declarations, often formal and written, detailing facts or opinions.

Least Costly Combination

An economic principle that firms seek to achieve by using the combination of factors of production that minimizes their costs while producing a given level of output.

Marginal Product Data

Information regarding the additional output that can be obtained by adding one more unit of a particular input, holding all other inputs constant.